Agenda packet — City Council and Authorities Concurrent, June 21, 2022 (part 6 of 8)

RESOLUTION NO. _

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA
ESTABLISHING WATER RATE SCHEDULE 2022-01 AND
RECYCLED WATER RATE SCHEDULE 2022-02 FOR CITY

SERVICE

BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

WHEREAS, all water furnished to utility customers by the City of Santa Clara shall be charged, paid for and supplied only in accordance with such applicable schedules, rules and regulations as the City Council shall adopt pursuant to the provision of Section 13.15.020 [entitled "Water Rates to be Determined by City Council"] of "The Code of the City of Santa Clara, California" ("SCCC") and the Rules and Regulations for Water Service of the City of Santa Clara;
WHEREAS, Article XIII D of the California Constitution requires that increases to property related fees and charges, including water service rates, be approved by the City Council at a Public Hearing conducted not less than 45 days after mailing notice of the proposed rate increase;
WHEREAS, notice of a Public Hearing to be held on June 21, 2022 was mailed to water utility

customers on May 2, 2022, which is more than 45 days prior to the Public Hearing;

WHEREAS, the notice was sent to 28,025 utility customers;

WHEREAS, the Council has reviewed the Water Rate Schedule 2022-01 and Recycled Water Rate Schedule 2022-02 (the "Rate Schedules") attached and incorporated into this Resolution by reference;
WHEREAS, the amounts shown on the Rate Schedules reflect the actual costs to provide utility services; and,
WHEREAS, on June 22, 2022, the Council conducted a Public Hearing, at which it reviewed all protests regarding the proposed rate increases.
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Resolution/Establishing Water Rate Schedule 2022-01
Rev: 11/22/17

Page 2 of 3 ends

NOW THEREFORE, BE IT FURTHER RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. That based on a tabulation of all the protests received prior to the close of the Public

Hearing, XXXX protests were received, which does not constitute a majority of affected water utility customers.

2. In accordance with Article XIIID § 6 of the California Constitution and as set forth in the accompanying Agenda Report, incorporated herein by this reference, the City Council finds:

A. The revenue derived from the Water Rates and Recycled Water Rates, as stated in the attached Rate Schedules, do not exceed the funds required to cover the operating and capital improvement project expenses for the provision of water; B. The revenue derived from the Water Rates and Recycled Water Rates will not be used for any purpose other than the provision of water and recycled water and related capital improvement projects;
C. The Water Rates and Recycled Water Rates will not exceed the proportional cost of the service attributable to each parcel;
D. The Water Rates and Recycled Water Rates are only charged for water service and programs that are currently available;
E. The Water Rates and Recycled Water Rates are not charged for general governmental services.

3. That Water Rate Schedule 2022-01 and Recycled Water Rate Schedule 2022-02, attached to this Resolution and incorporated by this reference, are hereby adopted and shall be effective per Section 4 of this Resolution.
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Resolution/Establishing Water Rate Schedule 2022-01
Rev: 11/22/17

Page 3 of 3 ends

4. All previously adopted water rate schedules, to the extent that they are inconsistent with those contained herein, are superseded by those charges provided for hereinabove as follows:

Commencing with the billing cycle for water service provided on or after July 1, 2022, and each subsequent billing cycle thereafter as set forth in Water Rate Schedule 2022-01 and Recycled Water Rate 2022-02.

5. Effective date. This resolution shall become effective immediately.

I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE 21st DAY OF JUNE, 2022, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES: COUNCILORS:

ABSENT: COUNCILORS:

ABSTAINED: COUNCILORS:

ATTEST:

NORA PIMENTEL, MMC

ASSISTANT CITY CLERK

CITY OF SANTA CLARA

Attachments incorporated by reference:

1. Water Rate Schedule 2022-01

2. Recycled Water Rate Schedule 2022-02
City of Santa Clara Water Rate Schedule 2022-01 Page 1 of 2

CITY OF SANTA CLARA
WATER RATE SCHEDULE 2022-01
(Replaces Water Rate Schedule 2021-01)
ADOPTED BY RESOLUTION NO. 22-XXX, June 21, 2022

RATE W-1, METERED POTABLE WATER SERVICE

Applicable to all metered potable water service provided by the City of Santa Clara

(1) MONTHLY QUANTITY CHARGES:

All potable water use, $7.33 per Hundred Cubic Feet (HCF). The Monthly Quantity Charge recovers the annual cost to operate the Water Utility, including groundwater charges, treated water purchased from others for resale, and energy for pumping. (2) MINIMUM MONTHLY METER RATES:

The minimum monthly meter rate includes a consumption allowance to recover fixed cost elements and accommodate water considered essential for health and safety.

WATER METER SIZE MINIMUM CHARGE($)
5/8 x 3/4 inch 20.54
1 inch 32.00
1 ½ inch 60.65
2inch 95.03
3inch 186.71
4inch 289.85
6inch 576.36
8 inch 920.17
10inch 1,378.58
12inch 1,937.26
RATE W-2, FIRE SERVICE

(1) MONTHLY FIRE SERVICE CHARGE:

SERVICE SIZE

MONTHLY CHARGE($)
2 inch 2.87
4 inch 16.25
6 inch 47.80
8 inch 101.82
10 inch 183.09
12 inch 295.91
City of Santa Clara Water Rate Schedule 2022-01 Page 2 of 2 (2) SPECIAL CONDITIONS:

Fire Service charges are imposed for maintenance and operation of the metering components, including capital replacement. No charge will be made for water used to extinguish fires or for testing. Any other usage of water through leakage or for general use shall result in the imposition of regular water service rates (RATE W- 1) for a minimum of three (3) billing cycles or longer, until such time as illicit use of water through the fire service connection has ceased.

Continued water usage through a fire service is a violation of City's Rules and Regulations and may cause interruption of service.

RATE W-3, CROSS CONNECTION CONTROLS

Applicability - Applicable to all service connections where a public cross connection control device has been required by the City or County Health Department. (1) MONTHLY CHARGE:

SIZE OF SERVICE MONTHLY CHARGE ($)
1 inch 7.33
2 inch 11.73
3 inch 23.47
4 inch 36.67
6inch 73.33
8 inch 117.33
10 inch 175.99
City of Santa Clara Recycled Water Rate Schedule 2022-02 Page 1 of 2

CITY OF SANTA CLARA
RECYCLED WATER RATE SCHEDULE 2022-02
(Replaces Recycled Water Rate Schedule 2020-02)
ADOPTED BY RESOLUTION NO. 22-XXX, June 21, 2022

RATE RW-1, METERED RECYCLED WATER SERVICE

Applicable to all metered service connections served by the City of Santa Clara Recycled Water System, except for those specified recycled water uses described in Rate RW-2.

(1) MONTHLY QUANTITY CHARGES:

All use: $4.12 per Hundred Cubic Feet (HCF).

(2) MINIMUM MONTHLY METER RATES:

The minimum monthly meter rate includes a consumption allowance to recover fixed cost elements and accommodate water considered essential for health and safety.

WATER METER SIZE MINIMUM CHARGE($)
5/8 x 3/4 inch 15.50
1 inch 25.09
1 ½ inch 49.06
2inch 77.83
3inch 154.55
4inch 240.85
6inch 480.60
8 inch 768.29
10inch 1,151.87
12inch 1,619.37
RATE W-2, FIRE SERVICES

Applicable to separate fire services (automatic sprinklers, private fire hydrants, etc.) required by the City of Santa Clara or insurance underwriters.

(1) MONTHLY FIRE SERVICE CHARGE:

SERVICE SIZE

MONTHLY CHARGE($)
2 inch 2.87
4 inch 16.25
6 inch 47.80
8 inch 101.82
10 inch 183.09
12 inch 295.91
City of Santa Clara Recycled Water Rate Schedule 2022-02 Page 2 of 2 (2) SPECIAL CONDITIONS:

Fire Service charges are imposed for maintenance and operation of the metering components, including capital replacement. No charge will be made for water used to extinguish fires or for testing. Any other usage of water through leakage or for general use shall result in the imposition of regular water service rates (RATE W -1) for a minimum of three (3) billing cycles or longer, until such time as illicit use of water through the fire service connection has ceased.

Continued water usage through a fire service is a violation of City's Rules and Regulations and may cause interruption of service.

RATE W-3, CROSS CONNECTION CONTROLS

Applicable to all service connections where a public cross connection control device has been required by the City or County Health Department.

(1) MONTHLY CHARGE:

SIZE OF SERVICE MONTHLY CHARGE ($)
1 inch 7.33
2 inch 11.73
3 inch 23.47
4 inch 36.67
6inch 73.33
8 inch 117.33
10 inch 175.99

Resolution No. 20-XXXX/Sewer Rate Schedule (S-22)
Rev: 11/22/17

Page 1 of 3 ends

RESOLUTION NO. 22-XXX

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA

ESTABLISHING MONTHLY SEWER SERVICE CHARGES AND
SEWER RATE SCHEDULE S-22

BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

WHEREAS, Section 13.10.090, entitled “Rates – Users Within the City”, of "The Code of the City of Santa Clara" (“SCCC"), provides that the City Council may by resolution establish and amend the monthly sewer service charges;
WHEREAS, Article XIII D of the California Constitution requires that utility customers be given a minimum of 45 days notice of any proposed rate increase; WHEREAS, notice of a Public Hearing to be held on June 21, 2022 was mailed to utility customers on May 2, 2022, which is more than 45 days prior to the Public Hearing; WHEREAS, the notice was sent to 28,025 utility customers; WHEREAS, the Council has reviewed the Sewer Rate Schedule S-22 (attached) and incorporated into this Resolution by reference;
WHEREAS, the amounts shown on the Schedule S-22 reflect the actual costs to provide utility services; and,
WHEREAS, on June 21, 2022, the Council conducted a Public Hearing, at which it reviewed all protests regarding the proposed rate increases.

NOW THEREFORE, BE IT FURTHER RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. That based on a tabulation of all protests received prior to the close of the Public Hearing, XX protests were received, which do not constitute a majority of affected utility customers.

2. That, In accordance with Article XIIID § 6 of the California Constitution and as set forth in the accompanying Agenda Report, incorporated herein by this reference:

- -
Resolution No. 20-XXXX/Sewer Rate Schedule (S-22)
Rev: 11/22/17

Page 2 of 3 ends

A. The revenues derived from the Sewer Rates, as stated in the attached Schedule S-22, do not exceed the funds required to cover the operating and capital improvement project expenses for the provision of sewer services;
B. The revenues derived from the Sewer Rates will not be used for any purpose other than the provision of sewer services and related capital improvement projects; C. The Sewer Rates will not exceed the proportional cost of the service attributable to each customer class;
D. The Sewer Rates are only charged for sewer programs that are currently available;
E. The Sewer Rates are not charged for general governmental services.

3. That Sewer Rate Schedule S-22, attached to this Resolution and incorporated by this reference, are hereby adopted and shall be effective per Section 4 of this Resolution.

4. All previously adopted sewer rate schedules, to the extent that they are inconsistent with those contained herein, are superseded by those charges provided for hereinabove as follows:

Commencing with the billing cycle for sewer service provided on or after July 1, 2022, and each subsequent billing cycle thereafter as set forth in Sewer Rate Schedule S-22.

5. Effective date. This resolution shall become effective immediately.

Resolution No. 20-XXXX/Sewer Rate Schedule (S-22)
Rev: 11/22/17

Page 3 of 3 ends

I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE 21strd DAY OF JUNE, 2022, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES: COUNCILORS:

ABSENT: COUNCILORS:

ABSTAINED: COUNCILORS:

ATTEST:

NORA PIMENTEL, MMC

ASSISTANT CITY CLERK

CITY OF SANTA CLARA

Attachments incorporated by reference:

1. Sewer Rate Schedule S-22
Sewer Rate Schedule S-22

Page 1 of 3 ends

SCHEDULE S-22

MONTHLY SEWER SERVICE CHARGES
EFECTIVE JULY 1, 2022
(REPLACES SCHEDULE S-20)

A. Residential Users:

Single Family dwelling units including accessory dwellings: $46.82 per month

Multiple dwelling unit structures including, but not limited to, duplexes, retirement homes, mobile home courts, college dormitories, and apartments: $44.69 per month per dwelling unit

B. Miscellaneous Users:

For all users other than residential users and major commercial and industrial users, the monthly service charges per month shall be as follows, depending on the appropriate North American Industrial Classification System (NAICS) class:

NAICS CLASS

DESCRIPTION

SERVICE
CHARGE
$/HCF1
SEWAGE

VOLUME AS A

PERCENTAGE

OF METERED

WATER USE
111998, 311XXX, 3121XX Food and Kindred Products $12.60 70% 322:XXX Paper $12.94 80%
211112, 325:XXX Industrial Chemical $9.29 90%
332812, 332813 Metal Plating $4.14 90%
332XXX, 333:XXX,
3341 IX, (excepting 332812,
332813, 333314)

Machinery Manufacturers

$7.57

90%
334XXX, 335XXX, 33632X
(excepting 33451X, 33411X,
334611)

Electric & Electronic Equip.

$5.11

90%
4411XX, 4412XX, 4471XX Auto Dealers & Service Station $6.17 90% 722110, 722410 Restaurants $12.83 90%
721XXX Motels & Hotels $6.59 90%
561740, 811490, 8123XX Laundries $5.57 90%

1 References the volume of sewage discharged. HCF=one hundred cubic feet=748 gallons Sewer Rate Schedule S-22

Page 2 of 3 ends

811l XX, 812930 Repair Shops & Car Washes $4.77 90%
713:XXX Amusement Parks $5.67 90%
621:XXX, 622XXX,
623:XXX Hospitals & Convalescent Homes $6.21 90%
611:XXX Schools & Colleges $6.00 24%
8131XX Churches $5.15 35%
Commercial/Industrial/Miscellaneous not otherwise specified in this schedule of charges
$5.41 90%

In no case shall the minimum charge be less than $46.82 per month.

C. Major Commercial and Industrial Users are those having (1) a sewage discharge of at least 25,000 gallons per day, or (2) having a daily discharge which is intermittent or irregular in strength, amount or nature. Major Commercial and Industrial Users shall have monthly sewer charges, which may consist of any or all of the following charges:

Annual Capital Cost Recovery:

Volume: $1,087,371 per million gallons per day of flow capacity BOD
2: $75,537 per 1,000 pounds per day of BOD removal capacity SS3: $52,105 per 1,000 pounds per day of SS removal capacity NH3 4: $178,596 per 1,000 pounds per day of NH 3 removal capacity

Operating and Maintenance Cost Recovery:

Volume: $2,993 per million gallons
BOD: $497per 1,000 pounds
SS: $628 per 1,000 pounds
NH3: $5,159 per 1,000 pounds

2 Biochemical Oxygen Demand: This is the quantity of oxygen utilized in the biological oxidation of organic matter under standard laboratory conditions for 5 days at a temperature of 20 degrees Centigrade. The determination of the charge for BOD is as follows: BOD in parts per million x 8.34 x volume in million gallons = pounds of BOD. 3 Suspended Solids – That which either floats on the surface or is in suspension in sewage and which is determined by laboratory filtering. The determination of the charge for Suspended Solids is as follows: SS in parts per million x

8.34 x volume in million gallons = pounds of Suspended Solids

4 Ammonia is that form of nitrogen in the tri-negative oxidation state which is chemically definable as the compound NH3. The determination of the charge for Ammonia is as follows: NH 3 in parts per million x 8.34 x volume in million gallons = pounds of Ammonia.

Sewer Rate Schedule S-22

Page 3 of 3 ends

The volume of sewage shall be based upon a fixed percentage of water usage noted, or based on standard methods acceptable to the Director.

The City may require the installation of special metering and sampling devices whenever the Director deems that such devices are required to determine the volume and/or strength of the sewage discharge. A customer may also request the installation of a special metering device.

Whenever special metering devices are installed, they shall be devices approved by the Director, and the cost of furnishing and installing said devices shall be borne by the customer.

DRAFT
UPDATED 2022 WATER AND SEWER

RATE STUDY

B&V PROJECT NO. 410918.0100

PREPARED FOR
City of Santa Clara
JUNE 21, 2022

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Table of Contents i
Table of Contents
Table of Contents ...................................................................................................................................................... i List of Tables ........................................................................................................................................................... iv Table of Figures ........................................................................................................................................................ v Acronyms ................................................................................................................................................................ vii Disclaimer ................................................................................................................................................................... i 1 Executive Summary ....................................................................................................................................... 1

1.1 Water System....................................................................................................................................... 1

1.2 Recycled Water System ....................................................................................................................... 1

1.3 Sewer System ....................................................................................................................................... 1

1.4 Financial Plan ....................................................................................................................................... 2

1.4.1 Water Utility .......................................................................................................................... 2

1.4.2 Recycled Water Utility ........................................................................................................... 3

1.4.3 Sewer Utility .......................................................................................................................... 4

1.5 Adequacy of Existing Rates to Meet Costs of Service .......................................................................... 5

1.6 Cost-of-Service Analysis ....................................................................................................................... 6

1.7 Rate Design .......................................................................................................................................... 6

1.7.1 Water and Recycled Water Utilities ...................................................................................... 6

1.7.2 Sewer Utility .......................................................................................................................... 9 Water and Recycled Water Rate Study ............................................................................................................. 11 2 Revenue and Revenue Requirements ...................................................................................................... 11

2.1 Customer and Water Consumption Projections ................................................................................11

2.1.1 Customer Classes ................................................................................................................11

2.1.2 Minimum Bills .....................................................................................................................11

2.1.3 Water Consumption ............................................................................................................12

2.2 Revenue Under Existing Rates ...........................................................................................................13

2.3 Other Revenue ...................................................................................................................................15

2.4 Operating and Maintenance Expenses ..............................................................................................15

2.5 Cap
ital Improvement Program ..........................................................................................................16

2.5.1 Capital Improvement Financing Plan ..................................................................................17

2.6 Transfers ............................................................................................................................................18

2.7 Reserves .............................................................................................................................................18

2.8 Projected Operating Results ..............................................................................................................19 3 Cost of Service Analysis ............................................................................................................................... 25

3.1 Functional Cost Components .............................................................................................................26 Updated 2022 Water and Sewer Rate Study | City of Santa Clara

ii B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

3.2 Allocation to Cost Components .........................................................................................................27

3.2.1 System Base, Max Day, and Max Hour Allocations .............................................................27

3.2.2 Allocation of Operating and Maintenance Expenses ..........................................................28

3.2.3 Allocation of Capital Investments .......................................................................................29

3.3 Units of Service ..................................................................................................................................30

3.4 Cost of Service Allocations .................................................................................................................30

3.4.1 Units Costs of Service ..........................................................................................................31

3.4.2 Distribution of Costs of Service to Customer Classes .........................................................31 4 Rate Design .................................................................................................................................................... 34

4.1 Existing Rates .....................................................................................................................................34

4.2 Proposed Rates ..................................................................................................................................34

4.2.1 Monthly Service Charge ......................................................................................................34

4.2.2 Fire Service ..........................................................................................................................36

4.2.3 Cross Connection ................................................................................................................37

4.2.4 Consumption Charge ...........................................................................................................38

4.3 Drought Conditions ............................................................................................................................38

4.3.1 W ater Shortage Contingency Plan ......................................................................................38

4.3.2 Drought Surcharges .............................................................................................................39

4.4 Typical Monthly Costs Under Proposed Charges ...............................................................................39

4.5 Neighboring Water Utilities ...............................................................................................................40 Sewer Rate Study .................................................................................................................................................. 42 5 Revenue and Revenue Requirements ...................................................................................................... 42

5.1 Customer and Water Consumption Projections ................................................................................42

5.1.1 Customer Classes ................................................................................................................42

5.1.2 Equivalent Dwelling Units ...................................................................................................42

5.1.3 Minimum Bills .....................................................................................................................43

5.1.4 Contributed Sewage Flow ...................................................................................................44

5.1.5 Major Users .........................................................................................................................44

5.2 Revenue Under Existing Rates ...........................................................................................................45

5.3 Oth
er Revenue ...................................................................................................................................47

5.4 Operating and Maintenance Expenses ..............................................................................................47

5.5 Debt Service Requirements ...............................................................................................................48

5.6 Capital Improvement Program ..........................................................................................................48

5.6.1 Capital Improvement Financing Plan ..................................................................................49

5.7 Transfers ............................................................................................................................................50

5.8 Reserves .............................................................................................................................................50 City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Table of Contents iii

5.9 Projected Operating Results ..............................................................................................................51 6 Cost of Service Analysis ............................................................................................................................... 55

6.1 Functional Cost Components .............................................................................................................55

6.2 Allocation to Cost Components .........................................................................................................56

6.2.1 Volume and Strength Allocations .......................................................................................56

6.2.2 Allocation of Operating and Maintenance Expenses ..........................................................56

6.2.3 Allocation of Capital Investments .......................................................................................57

6.3 Units of Service ..................................................................................................................................58

6.4 Cost of Service Allocations .................................................................................................................58

6.4.1 Units Costs of Service ..........................................................................................................58

6.4.2 Distribution of Costs of Service to Customer Classes .........................................................58 7 Rate Design .................................................................................................................................................... 63

7.1 Existing Rates .....................................................................................................................................63

7.2 Proposed Rates ..................................................................................................................................63

7.2.1 Monthly Service Charge ......................................................................................................63

7.2.2 Consumption Charge ...........................................................................................................64

7.2.3 Major Users .........................................................................................................................64

7.3 Typical Monthly Costs Under Proposed Charges ...............................................................................65

7.4 Neighboring Sewer Utilities ...............................................................................................................65 Appendix A – Ten-Year Financial Plan ............................................................................................................... 67 Water Utility ...............................................................................................................................................68 Recycled Water Utility ...............................................................................................................................69 Sewer Utility ...............................................................................................................................................70

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

iv B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 List of Tables
Table 1-1 Proposed Revenue Adjustment ....................................................................................... 6 Table 1-2 Proposed Three-Year Water Rate Schedule .................................................................... 8 Table 1-3 Proposed Three-Year Recycled Water Rate Schedule ..................................................... 9 Table 1-4 Proposed Three-Year Sewer Rate Schedules ................................................................. 10 Table 2-1 Minimum Bills ................................................................................................................ 12 Table 2-2 Billed Water Consumption ............................................................................................. 13 Table 2-3 Existing Water and Recycled Water Rates ..................................................................... 14 Table 2-4 Projected Revenue under Existing Rates ....................................................................... 15 Table 2-5 O&M Expenses ............................................................................................................... 16 Table 2-6 Capital Improvement Projects ....................................................................................... 17 Table 2-7 Construction Fund Financing Plan (Water) .................................................................... 17 Table 2-8 Construction Fund Financing Plan (Recycled Water) ..................................................... 18 Table 2-9 Operating Fund (Water) ................................................................................................. 22 Table 2-10 Operating Fund (Recycled Water) ................................................................................ 23 Table 3-1 Cost of Service Revenue from Rates (Water) ................................................................. 25 Table 3-2 Cost of Service Revenue from Rates (Recycled Water) ................................................. 26 Table 3-3 Allocation of O&M Expenditures (Water) ...................................................................... 28 Table 3-4 Allocation of O&M Expenditures (Recycled Water) ....................................................... 29 Table 3-5 Allocation of Capital Costs (Water) ................................................................................ 29 Table 3-6 Allocation of Capital Costs (Recycled Water) ................................................................. 30 Table 3-7 Units of Service (Water and Recycled Water) ................................................................ 32 Table 3-8 Units Cost of Service (Water) ......................................................................................... 33 Table 3-9 Distribution of Costs to Customer Classes (Water) ........................................................ 33 Table 3-10 Units Cost of Service (Recycled Water) ........................................................................ 33 Table 3-11 Distribution of Costs to Customer Classes (Recycled Water) ...................................... 33 Table 4-1 Costs within the Minimum Monthly Service Charge for FY 2023 (Water) ..................... 35 Table 4-2 Proposed Minimum Monthly Service Charge (Water) ................................................... 35 Table
4-3 Costs within the Minimum Monthly Service Charge for FY 2023 (Recycled Water) ..... 35 Table 4-4 Proposed Minimum Monthly Service Charge (Recycled Water) ................................... 36 Table 4-5 Costs within the Fire Service Charge for FY 2023 .......................................................... 36 Table 4-6 Proposed Fire Service Charge ........................................................................................ 37 Table 4-7 Costs within the Cross-Connection Charge for FY 2023................................................. 37 Table 4-8 Proposed Cross Connection Charge ............................................................................... 37 Table 4-9 Proposed Consumption Charges .................................................................................... 38 Table 4-10 Stages of Water Shortages Contingency Plan .............................................................. 38 City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Table of Contents v
Table 4-11 Proposed First Year Drought Charges, FY 2023 ........................................................... 39 Table 4-12 Proposed Three-Year Drought Charges ....................................................................... 39 Table 4-13 Typical Monthly Bill (Water) ........................................................................................ 40 Table 4-14 Typical Monthly Bill (Recycled Water) ......................................................................... 40 Table 5-1 EDUs ............................................................................................................................... 43 Table 5-2 Minimum Monthly Service Bills ..................................................................................... 43 Table 5-3 Contributed Sewage Flow .............................................................................................. 44 Table 5-4 Major Users .................................................................................................................... 45 Table 5-5 Existing Sewer Rates ...................................................................................................... 46 Table 5-6 Projected Revenue under Existing Rates ....................................................................... 47 Table 5-7 O&M Expenses ............................................................................................................... 48 Table 5-8 Long-Term Debt Service ................................................................................................. 48 Table 5-9 Capital Improvement Projects ....................................................................................... 49 Table 5-10 Construction Fund Financing Plan ............................................................................... 50 Table 5-11 Operating Fund ............................................................................................................ 53 Table 6-1 Cost of Service Revenue from Rates .............................................................................. 55 Table 6-2 Allocation of O&M Expenditures ................................................................................... 57 Table 6-3 Allocation of Capital Costs ............................................................................................. 57 Table 6-4 Units of Service .............................................................................................................. 60 Table 6-5 Units Cost of Service ...................................................................................................... 61 Table 6-6 Distribution of Costs to Customer Classes ..................................................................... 61 Table 7-1 Proposed Monthly Service Charge ................................................................................. 64 Table 7-2 Proposed Consumption Charges .................................................................................... 64 Table 7-3 Proposed Major User Charges ....................................................................................... 65 Table 7-4 Typical Monthly Bill ........................................................................................................ 65 Table of Figures
Figure 1-1 Water Operating Cash Flow ............................................................................................ 3 Figure 1-2 Recycled Water Operating Cash Flow ............................................................................. 4 Figure 1-3 Sewer Operating Cash Flow ............................................................................................ 5 Figure 2-1 Water Sales ................................................................................................................... 13 Figure 2-2 Status Quo Operating Cash Flow (Water) ..................................................................... 19 Figure 2-3 Status Quo Operating Cash Flow (Recycled Water) ..................................................... 20 Figure 2-4 Water Operating Cash Flow .......................................................................................... 24 Figure 2-5 Recycled Water Operating Cash Flow ........................................................................... 24 Figure 4-1 Comparison to Neighboring Water Utilities ................................................................. 41 Updated 2022 Water and Sewer Rate Study | City of Santa Clara

vi B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Figure 5-1 Status Quo Operating Cash Flow .................................................................................. 51 Figure 5-2 Operating Cash Flow ..................................................................................................... 54 Figure 7-1 Comparison to Neighboring Sewer Utilities ................................................................. 66

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Table of Contents vii
Acronyms
ADD Average Daily Demand
AWWA American Water Works Association
Black & Veatch Black & Veatch Management Consulting LLC BOD Biochemical Oxygen Demand
CIP Capital Improvement Program
City City of Santa Clara
CIS Customer Information System
EDU Equivalent Dwelling Unit
FY Fiscal Year (July 1 to June 30)
gpcd gallons per capita per day
HCF Hundred Cubic Feet
M Million
M1 Principles of Water Rates, Fees, and Charges
Max Day Maximum Day
Max Hour Maximum Hour
NH3 Ammonia
O&M Operation and Maintenance
RWF San Jose-Santa Clara Regional Wastewater Facility
SBx7-7 Senate Bill X7-7 (State of California in the Water Conservation Act of 2009) SFPUC San Francisco Public Utilities Commission
Study Water and Sewer Rate Study
TSS Total Suspended Solids
TY Test Year
Valley Water Santa Clara Valley Water District
WEF Water Environment Federation

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Table of Contents i
Disclaimer
Black & Veatch has prepared this report for the City, and it is based on information not within the control of Black & Veatch. The City has not requested Black & Veatch to make an independent analysis, verify the information provided to us, or render an independent judgment of the validity of the information provided by others. Because of this, Black & Veatch cannot, and does not, guarantee the accuracy thereof to the extent that such information, data, or opinions were based on information provided by others.

In conducting these analyses and in forming an opinion of the projection of future financial operations summarized in this report, Black & Veatch made certain assumptions on the conditions, events, and circumstances that may occur in the future. The methodology utilized in performing the analyses follows generally accepted practices for such projections. Such assumptions and methodologies are reasonable and appropriate for the purpose for which they are used. While we believe the assumptions are reasonable and the projection methodology valid, actual results may differ materially from those projected, as influenced by the conditions, events, and circumstances that occur. Such factors may include the utilities’ ability to execute the capital improvement program as scheduled and within budget, regional climate and weather conditions affecting the demand for water, discharge of sewage flow, and adverse legislative, regulatory, or legal decisions (including environmental laws and regulations) affecting the utilities’ ability to manage the system and meet water quality requirements.

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Executive Summary 1
1 Executive Summary
The City of Santa Clara (City) commissioned Black & Veatch Management Consulting, LLC (Black & Veatch) to perform an update of the Water and Sewer Rate Study (Study) for its Water, Recycled Water, and Sewer Utilities. The Study included the development of a three-year financial plan, a cost-of-service analysis, and the design of rates. In addition, a ten-year financial plan was developed to provide the City with a high-level view of each utility’s operations. The specific objectives of the Study were to:
 Evaluate the adequacy of projected revenues under existing rates to meet projected revenue requirements.
 Develop sound financial plans for the utilities covering a three and ten-year period for both ongoing operations and planned capital improvements.
 Allocate the utilities’ projected revenue requirements to the various customer classes in accordance with their respective service requirements.
 Develop a suitable rate schedule that produces revenues adequate to meet financial needs while recognizing customer costs of service and regulatory considerations such as Proposition 218 and applicable judicial decisions.

1.1 WATER SYSTEM
The Water Utility provides water services to approximately 26,000 residential, commercial, irrigation, and educational customers. The City obtains potable water from three primary sources: local groundwater, surface water from the Santa Clara Valley Water District (Valley Water), and imported water from the Hetch Hetchy watershed through the San Francisco Public Utilities Commission (SFPUC).

The water system infrastructure consists of 335 miles of transmission and distribution mains, 7 storage tanks totaling 28.8 million gallons of storage capacity, 21 wells, and 3 booster pump stations. The City has a target of obtaining 68% of the 5.8 billion gallons of water that flows to its customers each year from the City’s wells.

1.2 RECYCLED WATER SYSTEM
The Recycled Water Utility, operating since 1989, provides recycled water services to over 280 commercial, irrigation, and industrial customers. The City obtains recycled water from South Bay Water Recycling. The recycled water comes from the San Jose-Santa Clara Regional Wastewater Facility (RWF), an advanced tertiary treatment facility located in San Jose, of which the City is a co-owner. The recycled water infrastructure within the City limit boundary mainly consists of 34 miles of recycled water pipelines. A portion of the recycled water from the RWF supplies the Valley Water’s Silicon Valley Advanced Water Purification Center for advanced treatment (microfiltration, reverse osmosis, and advanced oxidation) to create a mix of high-quality recycled water that is blended back into the recycled water system.

1.3 SEWER SYSTEM
The Sewer Utility provides sewer services to approximately 26,000 residential, commercial, industrial, and municipal customers. Services include the construction and maintenance of the sewer Updated 2022 Water and Sewer Rate Study | City of Santa Clara

2 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 system and installing sewer lateral clean-outs at the property line. Sanitary sewer flows in the City are collected and transported through more than 288 miles of sewer main by way of six pumping stations to the San Jose-Santa Clara Regional Wastewater Facility. The RWF is a regional treatment facility that receives wastewater from seven agencies in Santa Clara County and can treat 167 million gallons a day (MGD) wastewater.

1.4 FINANCIAL PLAN
The City operates the utilities as individual self-supporting enterprises. Therefore, the utilities must develop financial plans that provide sufficient revenues to meet all operation and maintenance expenses, water purchases, wastewater treatment, debt service requirements, capital improvements funded from current revenues, and other expenditures.

The Study develops financial plans that project operating revenue, expenses, and capital financing costs for the utilities over a ten-year planning period beginning July 1, 2022, and ending June 30, 2032.

This report will focus on a three-year planning period for discussion, beginning July 1, 2022 and ending June 30, 2025. The full ten-year financial plans can be found in Appendix A.

The financial plans project future rate revenues under existing rates, operations and maintenance (O&M) expenses, principal and interest expense on debt, transfers, and capital improvement program (CIP) requirements. In the projection of rate revenues, annual projections of customers and water consumption rely upon the City’s historical data and estimates of growth. In addition, the Water Utility’s forecast incorporates efforts to continue to meet the conservation goals as established by the State Senate Bill 7x-7 (SB7x-7) and the City’s Water Shortage Contingency Plan.

On July 12, 2021, the City moved into Stage 2 of the Water Shortage Contingency Plan. It amended the City’s Water Use Rules and Regulations, calling for an ongoing voluntary 20% reduction based on 2013 water usage. The City took this action as of result of Valley Water’s action on June 9, 2021, which called for a mandatory 15% reduction in water usage countywide. 1 With water conservation
restrictions in place and despite the growth projections, the Water Utility will continue to be under the conservation levels set forth by SB7x-7.

1.4.1 Water Utility
The Water Utility’s revenue requirements are summarized below:
 Operation and Maintenance Expenses: The Water Utility anticipates O&M expenses to increase from $52.7M in FY 202 3 to $63.6M in FY 2025. Water production and water purchases account for most of this increase, representing approximately 65% of O&M expenses.  Debt Service: The Water Utility has no existing debt service, and no future debt is planned.

1 On March 28, 2022, Governor Newsom called on local water suppliers to move to level 2 of th eir Water Shortage Contingency Plans. Valley Water had implemented level 2 in June of 2021; therefore, the water projections already incorporate a level of conservation. Any further restrictions are not part of the baseline analysis.

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Executive Summary 3
 Capital Improvements: The Water Utility plans to execute an average of $5.2M per year in capital projects from FY 2023 to FY 2025.
 Reserves: The Water Utility plans to con tinue funding the operating fund reserve, construction fund reserve, rate stabilization fund reserve, and pension stabilization reserve. • The operating fund reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
• The construction fund reserve is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is 12-months of the following year’s CIP. • The rate stabilization fund reserve is to help mitigate future increases in drought-stricken years. The scheduled target is 10% of the prior year’s rate revenues. • The pension fund reserve is to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases.

The Water Utility is proposing revenue adjustments to allow it to operate the enterprise on a revenue-neutral basis and meet reserve targets, as shown in Figure 1-1.

Figure 1-1 Water Operating Cash Flow

1.4.2 Recycled Water Utility
The Recycled Water Utility’s revenue requirements are summarized below:
 Operation and Maintenance Expenses: The Recycled Water Utility anticipates O&M expenses to increase from $6.8M in FY 2023 to $9.1M in FY 2025. Recycled water purchase costs constitute most of the increase, averaging 86% of O&M expenses.
 Debt Service: The Recycled Water Utility has no existing debt service, and no future debt is planned.
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
- O&M
~ Revenue
Water Utility - Operating Fund
2023
- Debt Service
- cash Balance
2024
- Capital Projects
~ Target Cash Balance
2025
- Rate Stabilization
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

4 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022  Capital Improvements: The Recycled Water Utility plans to execute an average of $50k per year in capital projects from FY 2023 to FY 2025.
 Reserves: The City plans to continue funding the operating fund reserve, construction fund reserve, rate stabilization fund reserve, and pension stabilization reserve. • The operating fund reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
• The construction fund reserve is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is 12-months of the following year’s CIP. • The rate stabilization fund reserve is to help mitigate future increases in drought-stricken years. The scheduled target is 10% of the prior year’s rate revenues. • The pension fund reserve is to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases
The Recycled Water Utility is proposing revenue adjustments and drawing down on reserves to allow it to operate the enterprise on a revenue-neutral basis and meet reserve targets, as shown in Figure 1-2.

Figure 1-2 Recycled Water Operating Cash Flow

1.4.3 Sewer Utility
The Sewer Utility’s revenue requirements are summarized below:
 Operation and Maintenance Expenses: The Sewer Utility anticipates O&M expenses to increase from $31.1M in FY 2023 to $33.1M in FY 2025. RWF-related costs represent 66% of O&M expenses.
$10 ,000,000
$8,000 ,000
$6,000,000
$4,000 ,000
$2,000,000
$0
- O&M
~ Revenue
Recycled Water Utility - Operating Fund
2023
- Debt Service
~ Cash Balance
---
2024
- Capita l Projects
~ Target Cash Balance
2025
- Rate Stabili zation
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Executive Summary 5
 Debt Service: The Sewer Utility anticipates an average debt service payment of $2.8M per year from FY 2023 to FY 2025 associated with existing and proposed debt issuances. The City anticipates a net debt issuance of $0.4M in FY 2023 and $15.0M in FY 2024.  Capital Improvements: The Sewer Utility plans to execute an average of $20.5M per year in capital projects from FY 2023 to FY 2025.
 Reserves: The Sewer Utility plans to continue funding the operating fund reserve, construction fund reserve, rate stabilization fund reserve, and pension stabilization reserve. • The operating fund reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
• The construction fund reserve is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is 12-months of the following year’s City CIP and 6-months of the following year’s RWF CIP.
• The rate stabilization fund reserve is to help mitigate future increases in drought-stricken years. The scheduled target is 10% of the prior year’s rate revenues. • The pension fund reserve is to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases
The Sewer Utility is proposing revenue adjustments and drawing down on reserves to allow it to operate the enterprise on a revenue-neutral basis and meet reserve targets, as shown in Figure 1-3.

Figure 1-3 Sewer Operating Cash Flow

1.5 ADEQUACY OF EXISTING RATES TO MEET COSTS OF SERVICE Based on the financial plans, Black & Veatch recommends the revenue adjustments shown in Table 1-1 to meet the projected revenue requirements for FY 2023 to FY 2025. These do not represent $60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
- O&M
~ Revenue
Sewer Utility - Operating Fund
- -
2023
- Debt Service
- cash Balance
2024
- Capital Projects
~ Target Cash Balance
2025
- Rate Stab ilization
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

6 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 proposed rate increases to customers. Rather, these represent the overall revenue increases the utilities need to meet their overall obligations and maintain current service levels.

Table 1-1 Proposed Revenue Adjustments

1.6 COST-OF-SERVICE ANALYSIS
The cost-of-service analysis allocates the costs to the various customer classes of service in a fair and equitable manner. The methodologies used in the Study are specific to the respective utility operations. The following is a brief description of the methodologies.

The water and recycled water cost-of-service allocation performed in this Study uses the Base- Extra Capacity Method endorsed by the American Water Works Association (AWWA) Principles of Water Rates, Fees, and Charges, M1 (M1) manual. Under cost-of-service principles, costs are allocated to the different customer classes in proportion to their water system use. As recommended by AWWA, Black & Veatch distributed functional costs to the base (average load conditions), extra capacity (peaking), and customer-related parameters. This allocation methodology produces unit costs for allocation to individual customer classes based on the projected customer service requirements.

The sewer cost-of-service allocation performed in this Study follows the Functional Cost Allocation Method endorsed by the Water Environment Federation (WEF) Financing and Charges for Wastewater Systems, Manual of Practice 27 (MoP27) manual. Like the methodology used for water systems, the sewer cost of service analysis allocates costs to the different customer classes in proportion to their use of the sewer system. As recommended by WEF, Black & Veatch distributed functional costs to volume, strength, and customer-related parameters. This allocation methodology produces unit costs for allocation to individual customer classes based on the projected customer service requirements.

1.7 RATE DESIGN
The Right to Vote on Taxes Act, also known as Proposition 218, was passed by California voters in 1996 and added Article XIIIC and Article XIIID to the California Constitution. These articles provide the regulatory framework that guides and informs the rate-setting process. The cost-of-service analyses provide the cost nexus for the proposed rate structures. The regulatory framework helps ensure cost recovery is proportionate to the cost of providing the service.

1.7.1 Water and Recycled Water Utilities
To minimize impacts, retain simplicity, and ensure the reasonable stability of revenue, Black & Veatch recommends the following rate structure.
 Monthly Service Charge: The Water and Recycled Water Utilities should retain the minimum monthly service charge based on meter sizes for all customer classes. The minimum monthly service charge includes a minimum consumption allowance and recovers portions of fixed cost elements such as operating and capital components, meter maintenance and services, meter reading, issuing FY 2023 July 8.80% 10.00% 3.00%
FY 2024 July 8.80% 10.00% 3.50%
FY 2025 July 8.80% 10.00% 3.50%
Recycled
Water
Sewer
UtilityFiscal Year
Water
Utility
Effective
Month
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Executive Summary 7
bills, and maintenance and capacity costs associated with public fire protection. The minimum consumption allowance accommodates water considered essential for health and safety.  Consumption Charge: The Water and Recycled Water Utilities should maintain the uniform consumption charge for all customer classes. The consumption charge recovers costs associated with the base and extra capacity demands.
 Fire Service Charge: The Water Utility should continue to utilize the fire service charge based on meter size for private fire service connections. The fire service charge will recover maintenance and capacity costs associated with private fire protection costs.  Cross Connection Charge: The Water Utility should continue to utilize the cross-connection charge based on meter size for backflow connections. The cross-connection charge will recover the costs of maintenance associated with backflow devices.

Table 1-2 summarizes the recommended three-year rate schedules for all Water Utility components.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

8 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 1-2 Proposed Three-Year Water Rate Schedule

Table 1-3 summarizes the recommended three-year rate schedules for all Recycled Water Utility components.

Proposed
Customer Class FY 2023 FY 2024 FY 2025
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 20.54 22.25 24.09 1" 32.00 34.84 37.86
1-1/2" 60.65 66.31 72.28
2" 95.03 104.08 113.58
3" 186.71 204.79 223.73
4" 289.85 318.09 347.65
6" 576.36 632.81 691.86
8" 920.17 1,010.48 1,104.92
10" 1,378.58 1,514.04 1,655.66
12" 1,937.26 2,127.75 2,326.88
Fire Service ($/Month) $/month $/month $/month
2" 2.87 2.95 3.07
4" 16.25 16.72 17.41
6" 47.80 49.19 51.20
8" 101.82 104.77 109.06
10" 183.09 188.39 196.11
12" 295.91 304.48 316.95
Cross Connection ($/Month) $/month $/month $/month
1" 7.33 7.47 7.70
2" 11.73 11.95 12.32
3" 23.47 23.91 24.64
4" 36.67 37.35 38.50
6" 73.33 74.71 76.99
8" 117.33 119.53 123.19
10" 175.99 179.30 184.79
Consumption Charges ($/HCF)
General Customer 7.33 7.99 8.71 City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Executive Summary 9
Table 1-3 Proposed Three-Year Recycled Water Rate Schedule

1.7.2 Sewer Utility
To minimize impacts, retain simplicity, and ensure the reasonable stability of revenue, Black & Veatch recommends the following rate structure.
 Monthly Service Charge: The Sewer Utility should retain the monthly service charge based on equivalent dwelling units (EDUs) for all residential customer classes. In addition, the monthly service charge serves as the base amount, or minimum, for all non-residential customer classes.

Beginning in FY 2023, multi-family residential and single family residential will become separate customer classes. As part of the process to better align rates and charges to its customers, the City verified EDU information for the multi-family customers, which enabled the analysis of the different demands placed on the system by the different residential customers. The analysis showed that while multi-family customers use less water, they discharge more wastewater to the system as a class. It also revealed that the demands exerted on the system by multi-family customers was spread across a larger customer base. Therefore, the rate, determined by the cost-of-service analysis, would be less.  Consumption Charge: The Sewer Utility should retain its uniform consumption charges for each non-residential customer class. The recommended rate structure should be based on customer class.
 Major Commercial and Industrial Users: The Sewer Utility should retain the major commercial and industrial user charge for customers with high discharge quantities and/or high strength loadings.

Table 1-4 summarizes the recommended three-year rate schedules for all Sewer Utility components.

10 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 1-4 Proposed Three-Year Sewer Rate Schedules

Line Proposed
No. Customer Class FY 2023 FY 2024 FY 2025
Monthly Service Charge ($/EDU) $/month $/month $/month
1 Single Fam ily 46.82 48.50 50.28
2 Multi-Fam ily 44.69 46.32 48.05
Minimum Commercial Bill Charge ($/Month) $/month $/month $/month 3 A ll Custom e rs 46.82 48.50 50.28
Commodity Charge ($/HCF) $/HCF $/HCF $/HCF
1 Amusement Parks 5.67 5.82 5.99
2 Auto Deal ers & Servi ce Stati on 6.17 6.37 6.57
3 Churches 5.15 5.28 5.42
4 Com/Ind/Misc 5.41 5.56 5.71
5 Electric & Electronic Equip. 5.11 5.22 5.33
6 Food and Kindred Products 12.60 13.28 13.93
7 Hospi tal s & Conval escent Homes 6.21 6.41 6.60
8 Industrial Chemical 9.29 9.69 10.08
9 Laundries 5.57 5.74 5.89
10 Machinery Manufacturers 7.57 7.87 8.17
11 Me tal Plating 4.14 4.20 4.29
12 Motel s & Hotel s 6.59 6.82 7.05
13 Paper 12.94 13.65 14.31
14 Repair Shops & Car Washes 4.77 4.95 5.10
15 Restaurants 12.83 13.54 14.20
16 Schools & Colleges 6.00 6.15 6.32
Major Commercial and Industrial Users
Operating and Maintenance Cost Recovery
1 Vol ume ($/MG) 2,993.84 3,000.08 3,068.71
2 BOD ($/1,000 lbs) 497.33 497.47 508.29
3 SS ($/1,000 lbs) 628.54 628.75 642.43
4 NH3 ($/1,000 lbs) 5,159.79 5,161.10 5,274.31
Annual Capital Cost Recovery
5 Vol ume ($/MGD) 1,087,371 1,124,455 1,140,228
6 BOD ($/1,000 lbs/day) 75,537 97,560 113,092
7 SS ($/1,000 lbs/day) 52,105 67,304 78,018
8 NH3 ($/1,000 lbs/day) 178,596 230,700 267,439
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 11 Water and Recycled Water Rate Study
2 Revenue and Revenue Requirements
To meet the costs associated with providing water services to its customers, the Water and Recycled Water Utilities derive revenue from a variety of sources, including water user charges (rates), developer contributions, solar water heating, interest earned from the investment of available funds, engineering fees, and other miscellaneous revenues. Both utilities are constantly looking for other sources of revenue, such as grants, to fund infrastructure investments. Black & Veatch has projected the level of future revenue generated in the Study through an analysis of historical and future system growth in terms of the number of bills and water consumption. This section also projects the expenses, or revenue requirements, necessary to operate and maintain the system, invest in capital improvements, make debt service payments, and cover other water and recycled water systems expenses.

2.1 CUSTOMER AND WATER CONSUMPTION PROJECTIONS

2.1.1 Customer Classes
The Water Utility’s customer base includes both residential and non-residential accounts. The City has three distinct customer classes: General Customer, Fire Service, and Cross Connection.

The Recycled Water Utility’s customers are mainly non-residential. The City has two distinct customer classes: General Customer and Industrial Process. The City is working on transitioning Industrial Process to General Customer.

2.1.2 Minimum Bills
The City provides potable water services to approximately 26,000 customers and recycled water services to over 280 customers. All customers connected to the water and recycled water systems do so through metered connections. The City bills customers based on water consumption, but several bills do not meet the consumption allowance identified by meter size. Therefore, the City refers to these bills as minimum monthly service bills. Since the City bills customers based on minimum bills generated, the analysis included a review of historical bill patterns for customers and anticipated growth within the City. The projected total number of bills is expected to increase by 0.3% per year for the Water Utility and 1.4% for the Recycled Water Utility over the Study period.

Table 2-1 summarizes the projected number of minimum bills for the Water and Recycled Water Utilities.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

12 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 2-1 Minimum Bills

2.1.3 Water Consumption
Table 2-2 shows the projected water and recycled water consumption for the Study period. In determining the projected water and recycled water consumption, Black & Veatch analyzed historical water consumption patterns in conjunction with future water conservation requirements set by the City’s Water Shortage Contingency Plan and the continual requirement of SB 7x-7. In 2017, the State of California formally lifted the water restrictions as it declared the drought over. Unfortunately, in 2022 after another three years of dry weather, Governor Newsom called for local water suppliers to move to Level 2 of their Water Shortage Contingency Plans to drive water conservation. The City has been operating in Level 2 since June 2021 when Valley Water moved to Level 2. The State of California and Governor continue to monitor drought conditions which can lead to further water cutbacks and conservation measures for water consumption.

Many factors have contributed to the City’s steady decline in consumption. The City’s primary conservation goals can be found in the Water Shortage Contingency Plan, and Santa Clara’s Council codified the continuing goal to conserve in July of 2017. The City offers a rain barrel rebate program and works with the Valley Water on other outreach and rebate programs for water conservation. Expanding the use of recycled water to existing and new customers is important for the City in supplementing the use of potable water. Overall, customers have done well to increase efficiency in the use of water resources.

Figure 2-1 below represents the population growth and a decline in water consumption.

Fiscal Year Ending June 30,
FY 2023 FY 2 0 24 FY 2025
(Bills) (Bills) (Bills)
Water Utility
1 General Customers 39,364 39,463 39,562 2 Total 39,364 39,463 39,562
Recycled Water Utility
3 General Customers 535 545 550 4 Total 535 545 550
Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 13 Figure 2-1 Water Sales

Recognizing that the City has met SB 7x-7 requirements and water consumption was at historic lows, the City anticipates an average rebound of 0.4% per year for the Water Utility and 1.5% per year for the Recycled Water Utility over the Study period. The City currently bills water consumption in hundred cubic feet (HCF) and only charges for consumption more than the allowance.

Table 2-2 Billed Water Consumption

2.2 REVENUE UNDER EXISTING RATES
Water and recycled water user rates serve as the primary source of revenue for the Water and Recycled Water Utilities. Therefore, the level of future rate revenue is important in developing a long- range financial plan. To determine rate revenue, the projected system growth in terms of the number of Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
(HCF) (HCF) (HCF)
Water Utility
1 General Customers 7,021,637 7,056,745 7,074,387 2 Total Usage (HCF) 7,021,637 7,056,745 7,074,387 3 Total Usage (AF) 16,119 16,200 16,241 Recycled Water Utility
4 General Customers 1,550,341 1,581,348 1,597,161 5 Total 1,550,341 1,581,348 1,597,161
6 Total Usage (AF) 3,559 3,630 3,667 Line No. Description
Total Potable Water Sales
13 5 . 000 ~--------------------------------------------~ 11 . 000 10 , 000
9 . 000
8 . 000 &
"-
.. ! 110 . 000
7 , 000 Sl]
6 . 000
5 . 000
Current Wat er U se
85 , 000 4 , 000
####~##~####~~~~~~~~#~~~~~~~~~~~~~~
Ye o,-
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

14 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 minimum bills and billed water consumption is multiplied by the applicable rates to determine water and recycled water rate revenue.

Table 2-3 shows the current Water and Recycled Water Utilities rate schedules. It is important to note that the minimum monthly service charge applies to customers that do not exceed the consumption allowance within the meter sizes. Therefore, the minimum monthly service charge serves as a baseline cost that the City needs to recover.

Table 2-3 Existing Water and Recycled Water Rates

Table 2-4 summarizes projected water and recycled water rate revenue under existing rates. As shown, the revenue generated is projected to increase over the Study period in conjunction with the increase in the number of minimum bills and water consumption. The projected Water Utility revenues increase from $50.7M in FY 2023 to $51.1M in FY 2025, representing an overall increase of 0.7% over the three-year study period. The projected Recycled Water Utility revenue increases from $5.9M in FY 2023 to $6.0M in FY 2025, reflecting an overall increase of 3.0% over the three-year Study period.

All City All City
FY 2022 FY 2022
Water Utility Water Utility
Minimum Monthly Meter Rates ($/mo) Fire Service Charges ($/mo) 5/8" x 3/4" 19.81 2" 2.87
1" 30.67 4" 16.26
1-1/2" 57.84 6" 47.83
2" 90.45 8" 101.88
3" 177.40 10" 183.20
4" 275.21 12" 296.09
6" 546.93
8" 872.98 Cross Connection Charges ($/mo)
10" 1,307.72 1" 8.06
12" 1,837.56 2" 12.90
3" 25.80
Recycled Water Utility 4" 40.31
Minimum Monthly Meter Rates ($/mo) 6" 80.62
5/8" x 3/4" 18.90 8" 129.00
1" 29.36 10" 193.49
1-1/2" 55.51
2" 86.89 Consumption Charges
3" 170.57 Water Utility ($/HCF)
4" 264.71 General Customers 6.69
6" 526.21
8" 840.01 Recycled Water Utility ($/HCF)
10" 1,258.41 General Customers 3.74
12" 1,768.34 Industrial Process 3.74
DescriptionDescription
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 15 Table 2-4 Projected Revenue under Existing Rates

2.3 OTHER REVENUE
Other sources of operating revenue include charges for hydrant flow tests, meter tests, engineering plan review, water installation and relocation, interest on investments, and other miscellaneous revenues. In total, other operating revenues represent less than 1.8% of the Water Utility’s total revenue and 6.5% of the Recycled Water Utility’s total revenue. The City anticipates that these revenues will remain relatively constant for the duration of the Study period.

2.4 OPERATING AND MAINTENANCE EXPENSES
Table 2-5 summarizes the Water and Recycled Water Utilities’ projected O&M expense for the Study period. These expenses include costs related to salaries and benefits, materials and supplies, contract and professional services, water supply costs, indirect and direct costs, and routine capital outlay. The City anticipates that all O&M expenditures, excluding water supply costs, will increase on average by 3.6% annually for the Water Utility and 4.5% annually for the Recycled Water Utility from the FY 2021.

Water supply costs include water production and purchased water costs. In the case of the Water Utility, the City has three main sources of water: 1) groundwater pumped from City-owned wells; 2) surface water from the Valley Water and; 3) imported water from the Hetch Hetchy watershed from SFPUC. The City operates 26 groundwater wells that tap the underground aquifers, which make up a targeted amount of approximately 59% of the City's water supply. The City imports the remainder of its water supplies from the two wholesale water agencies. Based on estimates of groundwater and wholesale rates provided by Valley Water and SFPUC, the City expects water production and purchased water costs to increase by at least 28.3% over the Study period.

Recycled water is a reliable drought-proof source of water that helps offset the use of potable sources, especially in drought-prone years in California. In the case of the Recycled Water Utility, the City has one main source of recycled water: The San Jose-Santa Clara Regional Wastewater Facility. This facility produces highly treated water delivered through separate pipelines. Based on estimates from the facility, the City expects purchased recycled water costs to increase by at least 38.4% over the Study period.

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
($) ($) ($)
Water Utility
1 General Customers 48,531,700 48,770,500 48,892,400 2 Fi re Servi ce 978,600 979,600 980,600 3 Cross Connection 1,190,800 1,192,200 1,193,500 4 Total 50,701,100$ 50,942,300$ 51,066,500$
Recycled Water Utility
5 General Customers 5,862,000 5,979,000 6,038,500 6 Total 5,862,000$ 5,979,000$ 6,038,500$
Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

16 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 2-5 O&M Expenses

As shown in Table 2-5, the Water Utility’s O&M expenses increase from $52.7M in FY 2023 to $63.6M in FY 2025, while the Recycled Water Utility’s O&M expenses increase from $6.8M in FY 2023 to $9.1M in FY 2025.

2.5 CAPITAL IMPROVEMENT PROGRAM
The Water and Recycled Water Utilities develop five-year Capital Improvement Plans annually to identify water and recycled water system needs, including assessments, inspections, maintenance, and rehabilitation and replacement requirements.

Table 2-6 summarizes the Water and Recycled Water Utilities CIP for FY 2023 through FY 2025.

The Water Utility is projecting $15.7M in CIP, and the Recycled Water Utility is projecting $150k in CIP over the Study period, which includes both capital and replacement projects. The City has posted the CIP Budget on its website for complete details associated with each CIP project.2

2 The City of Santa Clara. Finance Department. < http://santaclaraca.gov/government/departments/finance> Fiscal Year Ending June 30,
FY 2023 FY 2 0 24 FY 2025
($) ($) ($)
Water Utility
1 Salaries 6,031,000 6,326,500 6,567,000
2 Benefi ts 3,418,400 3,592,500 3,775,000
3 Mate rials/Se rvice s/Supplie s 2,532,200 2,582,700 2,634,200 4 Interfund Services 7,584,700 7,784,300 8,022,000 5 Resource & Production 33,178,000 38,057,900 42,557,200 6 Capital Outlay 0 0 0 7 Total 52,744,300$ 58,343,900$ 63,555,400$
Recycled Water Utility
8 Salaries 403,400 425,200 442,700
9 Benefi ts 232,500 244,400 256,900
10 Mate rials/Se rvice s/Supplie s 46,000 46,900 47,800 11 Interfund Services 373,100 388,100 404,200 12 Resource & Production 5,761,600 6,815,600 7,974,000 13 Capital Outlay 0 0 0 14 Total 6,816,600$ 7,920,200$ 9,125,600$
Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 17 Table 2-6 Capital Improvement Projects

2.5.1 Capital Improvement Financing Plan
The City funds annual expenditures for the CIP from a combination of available funds on hand, connection charges, developer contributions, and revenues derived from user rates. As shown in Table 2-7 and Table 2-8, the average annual CIP expenditure is $5.2M for the Water Utility and $50k for the Recycled Water Utility. There is no planned annual CIP contribution from the Water Utility Operating Fund and Recycled Water Utility over the Study period. The CIP will be funded through funds on hand.

Table 2-7 Construction Fund Financing Plan (Water)

Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
($) ($) ($)
Water Utility
1 7005 Buildings and Grounds 865,000 1, 515,000 735,000 2 7054 Distribution System
Repl acement/Restorati on 2,000,000 2,0 00,000 2,000,000 3 7057 Asset Management Program 200,000 15 0,000 150,000 4 7058 SCADA Improvements 500,000 50 0,000 500,000 5 7059 New and Repl acement Wel l s 3,100,000 1, 000,000 500,000 6 Total 6,6 65,000$ 5,165,000$ 3,885,000$
Recycled Water Utility
7 7505 Recycl ed Water System Mai ns and
Servi ces 50,000 50, 000 50,000
8 Total 50,000$ 50,000$ 50,000$
Line No. Description
Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
($) ($) ($)
Source of Funds
1 Intra Transfer In - Debt Financing 0 0 0 2 Intra Transfer In - Customer Service Charge 0 0 0 3 Connection Charges 0 0 0 4 Developer Contributions 0 0 0 5 Total Sources 0$ 0$ 0$ Use of Funds
6 Improvements Projects 6,665,000 5,165,000 3,885,000 7 Total Uses 6,665,000$ 5,165,000$ 3,885,000$
8 Net Annual Cash Balance (6,665,000) (5,165,000) (3,885,000) 9 Beginning Unrestricted Fund Balance 22,750,200 16,585,200 11,420,200 10 Net Cumulative Fund Balance 16,085,200$ 11,420,200$ 7,535,200$ 11 Minimum Construction Reserves 5,165,000$ 3,885,000$ 3,435,000$ Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

18 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 2-8 Construction Fund Financing Plan (Recycled Water)

2.6 TRANSFERS
The Water and Recycled Water Utilities will each conduct transfers from their respective Operating Funds and other funds over the Study period. Table 2-9, Lines 18 to 20 for the Water Utility and Table 2-10, Lines 15 to 17 for Recycled Water Utility summarize these associated amounts, respectively. The other funds consist of the Rate Stabilization Fund, Pension Stabilization Fund, and Construction Fund. See Section 2.7 for further explanation on Rate Stabilization and Pension Stabilization Funds. The Construction Fund transfers represent money to cover planned CIP project expenditures. These transfers do not represent direct operating expenses for either enterprise; therefore, Black & Veatch includes these costs as “below-the-line” cash flow items and does not include them as O&M expenses.

2.7 RESERVES
A utility typically establishes reserves for several reasons, such as covering shortfalls in operating revenues, maintaining strong bond ratings, covering day-to-day operating costs, and easing the burden on ratepayers associated with large rate increases. Per the reserve level recommendations, the Water and Recycled Water Utilities will maintain the following four reserves:
 Operating Reserve represents working capital maintained by the Operating Fund to cover day- to-day expenses and maintain enough funds to cover accounts receivables if there are supplier issues, periods of lower-than-expected water sales, or unforeseen cost increases. The reserve will maintain a minimum balance of 90 days of operating expenses once fully funded  Construction Reserve represents funds used for unforeseen and unbudgeted capital costs. Once fully funded, this reserve will maintain a minimum balance of 12-months of the following year’s planned CIP.

Fiscal Year Ending June 30,
FY 2023 FY 2 0 24 FY 2025
($) ($) ($)
Source of Funds
1 Intra Transfer In - Debt Financing 0 0 0 2 Intra Transfer In - Customer Service Charge 0 0 0 3 Connection Charges 0 0 0 4 Developer Contributions 0 0 0 5 Total Sources 0$ 0$ 0$ Use of Funds
6 Improvements Projects 50,000 50,000 50,000 7 Total Uses 50,000$ 50,000$ 50,000$
8 Net Annual Cash Balance (50,000) (50,000) (50,000) 9 Beginning Unrestricted Fund Balance 1,926,400 1,626,400 1,326,400 10 Net Cumulative Fund Balance 1,876,400$ 1,576,400$ 1,276,400$ 11 Minimum Construction Reserves 50,000$ 50,000$ 50,000$ Line No. Description
I
---
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 19  Rate Stabilization Reserve represents funds used to absorb revenue shortfall due to short-term decreases in water sales. This reserve stabilizes water and recycled water rate revenue and is an effort to avoid wide swings in rates charged to customers over time. The reserve will maintain a minimum balance of 10% of water and recycled water sales revenue when fully funded.  Pension Stabilization Reserve represents funds used to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases. The reserve target is $3.0M for the Water Utility and $150,000 for the Recycled Water Utility by FY 2030.

Appropriate reserve levels help the Water and Recycled Water Utilities with liquidity, provide operational flexibility, and demonstrate fiscal responsibility to the rating agencies, which allows the City to access lower-cost funds.

2.8 PROJECTED OPERATING RESULTS
The revenue requirements of the Water and Recycled Water Utilities consist of O&M expenses, debt service, capital expenditures, and reserve requirements.

To fully understand the current condition of the Water and Recycled Water Utilities, it is important to examine the cash flow projections under the status quo scenario. As shown in Figure 2-2 and Figure 2-3, the status quo conditions would project that both utilities would operate from an annual deficit position, thus requiring the use of reserves to keep operating. In this scenario, the Water and Recycled Water Utilities would not impose any revenue increases over the Study Period and continue to incur O&M expenses, pay for the execution of the planned CIP, and transfer to reserves.

Figure 2-2 Status Quo Operating Cash Flow (Water)

$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
-$10,000 ,000
-$20,000 ,000
- O&M
- Revenue
Water Utility - Operating Fund
--
2023
- Debt Service
- cash Balance
--
2024;---------- ~ 20~25
- Capital Projects
~ Target Cash Balance
- Rate Stabilization
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

20 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Figure 2-3 Status Quo Operating Cash Flow (Recycled Water)

The analyses performed for the Study indicate that the City should implement the proposed revenue increases shown in Table 2-9 and Table 2-10 if it wishes to keep the Water and Recycled Water Utilities in a balance financial condition. The revenue increases represent the overall total revenue adjustment needed to meet revenue requirements. The revenue adjustment does not represent adjustments to the individual rates but reflects the overall level of revenue needed to meet the Water and Recycled Water Utilities’ obligations.

The suggested revenue increases help the Water and Recycled Water Utilities meet the following goals:
 Meet budgeted operating obligations in the three FYs.  Meet planned capital investments in the three FYs.
 Maintain an operating reserve of 90 days of operating expenses.  Maintain construction reserve of 12-months of next year’s CIP.  Continue transfers for the rate stabilization reserve to meet the goal of 10% of rate revenues.  Continue transfers for the pension stabilization reserve to meet the FY 2030 goal.

Table 2-9 and Table 2-10 summarize proposed Operating Funds for the Study Period. The Operating Funds consist of 1) Revenue and 2) Revenue Requirements.

Revenue
 Line 1 is the revenue under existing rates.
 Lines 2 through 4 are the additional revenues generated from the required annual revenue increases. The additional revenue generated is a direct reflection of the number of months the increase is effective for, and therefore amount might calculate at less than that stated amount.  Line 6 is the total revenue generated from user charges. $10 ,000,000
$8,000 ,000
$6,000 ,000
$4,000 ,000
$2,000 ,000
$0
- O&M
-.- Revenue
Recycled Water Utility - Operating Fund
--
2023 2024 2025
- Debt Service - Capita l Projects - Rate Stabilization -.- cas h Ba lance -.. Target Cash Balance
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 21  Line 14 for the Water Utility and Line 9 for the Recycled Water Utility represent other operating revenues.
 Line 11 for the Recycled Water Utility represents transfers into operating.  Line 15 for the Water Utility and Line 12 for the Recycled Water Utility represent total revenues for the enterprises.

Revenue Requirements
 Line 17 for the Water Utility and Line 14 for the Recycled Water Utility represent O&M expenses. The O&M expenses include water production and water purchase.  Line 21 for the Water Utility and Line 18 for the Recycled Water Utility represent transfers. The transfers include money to the Rate Stabilization Fund, Pension Fund, and Construction Fund.  Line 22 for the Water Utility and Line 19 for the Recycled Water Utility represent total revenue requirements for the enterprises.

Line 25 for the Water Utility and Line 22 for the Recycled Water Utility represent the net cumulative cash balance within the Operating Funds. The net cumulative cash balance intends to match, to the extent possible, Line 26 for the Water Utility and Line 23 for the Recycled Water Utility. The cash balance reserve is required to ensure the Operation Fund can continue in the event of a supplier interruption, market price fluctuations of critical equipment or supplies, or an abrupt drop in account receivables. The reserve target minimum is 90 days of O&M expenses.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

22 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 2-9 Operating Fund (Water)

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Exi sti ng Rates 51,024,600 51,267,300 51,392,300 Year Months Effective Rate Adj
2 FY 2023 12 8.80% 4,490,200 4,511,500 4,522,500 3 FY 2024 12 8.80% 4,908,500 4,920,500
4 FY 2025 12 8.80% 5,353,500
5 Increased Revenue Due to Adjustments 4,490,200 9,420,000 14,796,500 6 Subtotal Rate Revenue 55,514,800$ 60,687,300$ 66,188,800$ Other Operating Revenue
7 Solar System Maintenance 77,800 77,800 77,800 8 Water System Mai ntenance 43,600 43,600 43,600 9 Water Construction 0 0 0 10 Water System Operati ons 0 0 0 11 A dm inistration De sign 882,200 888,900 895,800 12 Water Quality 0 0 0 13 Water Resources 74,700 74,700 74,700 14 Subtotal Other Operating Revenue 1,078,300$ 1,085,000$ 1,091,900$ 15 Total Revenue 56,593,100$ 61,772,300$ 67,280,700$
Revenue Requirements
Operating & Maintenance
16 O&M Expenses 52,744,300 58,343,900 63,555,400
17 Subtotal O&M 52,744,300$ 58,343,900$ 63,555,400$
Transfers
18 Transfer to Rate Stabilization Fund 0 0 2,000,000 19 Transfer to Pensiotn Stabilization Fund 199,400 199,400 199,400 20 Transfer to Water Construction Fund 0 0 0 21 Total Transfers 199,400$ 199,400$ 2,199,400$ 22 Total Revenue Requirements 52,943,700$ 58,543,300$ 65,754,800$ 23 Net Annual Cash Balance 3,649,400 3,229,000 1,525,900 24 Beginning Fund Balance 7,336,200 10,985,600 14,214,600 25 Net Cumulative Fund Balance 10,985,600$ 14,214,600$ 15,740,500$ 26 Mi ni mum Operati ng Reserves (90 Days) 13,005,400$ 14,386,200$ 15,671,200$ Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 23 Table 2-10 Operating Fund (Recycled Water)

Figure 2-4 presents the proposed Water Utility Operating Fund, and Figure 2-5 presents the Recycled Water Utility Operating Fund.

Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Exi sti ng Rates 5,862,000 5,9 79,000 6,038,500 Year Months Effective Rate Adj
2 FY 2023 12 10.00% 586,200 597,900 603,900 3 FY 2024 12 10.00% 657,700 664,200
4 FY 2025 12 10.00% 730,700
5 Increased Revenue Due to Adjustments 586,200 1,255,600 1,998,800 6 Subtotal Rate Revenue 6,448,200$ 7,234,600$ 8,037,300$ Other Operating Revenue
7 System Maintenance 92,000 93,800 95,700 8 South Bay Water Recycling System Maintenan 413,700 413 ,700 413,700 9 Subtotal Other Operating Revenue 505,700$ 507,500$ 509,400$ Transfers From
10 RW Capital Fund 0 250,000 250,000 11 Subtotal Transfers From -$ 250,000$ 250,000$ 12 Total Revenue 6,953,900$ 7,992,100$ 8,796,700$ Revenue Requirements
Operating & Maintenance
13 O&M Expenses 6,816,600 7,920,200 9,125,600 14 Subtotal O&M 6,816,600 7,920,200 9,125,600 Transfers
15 Transfer to Rate Stabilization Fund 0 0 0 16 Transfer to Pensiotn Stabilization Fund 9,800 9,800 9,800 17 Transfer to Recycled Water Const Fund 0 0 0 18 Total Transfers 9,800 9,800 9,800 19 Total Revenue Requirements 6,826,400$ 7,930,000$ 9,135,400$ 20 Net Annual Cash Balance 127,500 62,100 (338,700) 21 Beginning Fund Balance 4,469,600 4,597,100 4,659,200 22 Net Cumulative Fund Balance 4,597,100$ 4,659,200$ 4,320,500$ 23 Mi ni mum Operati ng Reserves (90 Days) 1,680,800$ 1,952,900$ 2,250,100$ Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

24 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Figure 2-4 Water Operating Cash Flow

Figure 2-5 Recycled Water Operating Cash Flow

$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
- O&M
__.,__ Revenue
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
- O&M
~ Revenue
Water Utility - Operating Fund
2023
- DebtService
..,,._ Cash Ba lance
2024
- Capital Projects
__. Target Cash Balance
2025
- Rate Stab ilization
Recycled Water Utility - Operating Fund
--
2023
- Debt Service
~ Cash Balance
--
2024
- Capital Projects
~ Target Cash Balance
2025
- Rate Stabilization
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 25 3 Cost of Service Analysis
The cost-of-service analysis requires recovery of the City’s needed revenues from water and recycled water service rates, allocated to customer classes according to the service rendered. An equitable rate structure allocates the capture of revenue requirements to customer classes based on the quantity of water consumed, peak flows, the number of customer connections, and other relevant factors.

In analyzing the Water and Recycled Water Utilities’ cost of service for allocation to its customer classes, Black & Veatch selected the annual revenue requirements for FY 2023 as the Test Year (TY) requirements to demonstrate the development of cost-of-service water and recycled water rates. Table 3-1 summarizes the total costs of service that need to be recovered from water user rates. Table 3-2 summarizes the total costs of service that need to be recovered from recycled water user rates. Both tables represent TY 2023.

Table 3-1 Cost of Service Revenue from Rates (Water)

Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expenses 52,744,300 0 52,744,300 2 Debt Servi ce 0 0 0 3 Transfers 199,400 0 199,400 4 Subtotal 52,943,700 0 52,943,700
Less Revenue Requirements Met from Other Sources
5 Solar System Maintenance 77,800 0 77,800 6 Water System Mai ntenance 43,600 0 43,600 7 Water Construction 0 0 0 8 Water System Operati ons 0 0 0 9 A dm inistration De sign 882,200 0 882,200 10 Water Quality 0 0 0 11 Water Resources 74,700 0 74,700 12 Subtotal 1,078,300 0 1,078,300
Adjustments
13 Adjustment for Annual Cash Balance (3,649,400) 0 (3,649,400) 14 Subtotal (3,649,400) 0 (3,649,400)
15 Cost of Servi ce to be Recovered from Rates 55,514,800$ 0$ 55,514,800$ Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

26 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 3-2 Cost of Service Revenue from Rates (Recycled Water)

The total revenue requirement is shown in Table 3-1, Line 4, which corresponds with Table 2-9, Line 22, and Table 2-10, Line 19. As shown in Line 12 for the Water Utility and Line 7 for the Recycled Water Utility, we deduct revenues from other sources to derive the net revenue requirement recovered through rates, which correspond with Table 2-9, Line 14 and Table 2-10, Lines 9 and 10, respectively.

Line 13 for the Water Utility and Line 8 for the Recycled Water Utility represent the net annual cash balance during the TY. If the enterprise is drawing down funds already in the Operating Fund, this number is positive. The number will be negative if the enterprise is replacing funds. In the case of the Water Utility, the $3.7M figure indicates that the forecast is projecting a positive cash balance for the year. In the case of the Recycled Water Utility, the $127k figure indicates that the forecast is projecting a positive cash balance for the year.

3.1 FUNCTIONAL COST COMPONENTS
The first step in conducting a cost-of-service analysis involves analyzing the cost of providing water and recycled water service by system function to properly allocate the costs to the various customer classes and, subsequently, design rates. As a basis for allocating costs of service among customer classes, the study separates costs into the following four basic functional cost components: (1) Base; (2) Extra Capacity; (3) Customer; and (4) Direct Assignment, described as follows:
 Base costs represent operating and capital costs of the system associated with service to customers to the extent required under constant or average annual load conditions without the elements necessary to meet water consumption variations or peak demands.  Extra Capacity costs represent those operating and capital costs incurred in meeting peaking demands. Peaking demands represent water consumption in excess of the average rate of use.

Operating Capital Tota l
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expenses 6,816,600 0 6,816,600 2 Debt Servi ce 0 0 0 3 Transfers 9,800 0 9,800 4 Subtotal 6,826,400 0 6,826,400
Less Revenue Requirements Met from Other Sources
5 System Maintenance 92,000 0 92,000 6 South Bay Water Recycl i ng System Mai nten 413,700 0 41 3,700 7 Subtotal 505,700 0 505,700
Adjustments
8 Adjustment for Annual Cash Balance (127,500) 0 (127,500) 9 Subtotal (127,500) 0 (127,500)
10 Cost of Servi ce to be Recovered from Rates 6,448,200$ 0$ 6,448,200$ Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 27  Customer costs are those expenditures that tend to vary in proportion to the number of customers connected to the system. These include meter reading, billing, collecting, accounting, maintenance, and capital costs associated with meters and services.  Directly assigned costs are specifically identified as those incurred to serve specific customers.

These costs include fire protection and cross-connections for the Water Utility. The Recycled Water Utility has no direct assigned categories.

3.2 ALLOCATION TO COST COMPONENTS
The next step of the cost-of-service process involves allocating each cost element to functional cost components based on the parameter or parameters having the most significant influence on the magnitude of that cost element. O&M expenses are allocated directly to appropriate cost components.

A detailed allocation of related capital investment is used as a proxy for allocating capital and replacement costs. The separation of costs into functional components provides a means for distributing such costs to the various classes of customers based on their respective responsibilities for each type of service.

3.2.1 System Base, Max Day, and Max Hour Allocations
The water and recycled water systems consist of various facilities designed and operated to fulfill a given function. For the systems to provide adequate service to its customers, it must be capable of meeting the annual volume requirements and the maximum demand rates placed on the system.

Because not all customers and types of customers exert maximum demand at the same time, the capacities of the various facilities must meet the maximum coincidental demand of all classes of customers. Each water and recycled water service facility within the systems has an underlying average demand exerted by the customers for whom the base cost component applies. For those facilities designed solely to meet average day demand, 100% of the costs go to the base cost component. Extra capacity requirements associated with coincidental demands in excess of average use consist of maximum daily and maximum hourly demand subcomponents.

The first step in determining the allocation percentages for volume-related cost allocations is to assign system peaking factors. The base element is equal to the average daily demand (ADD) and assigned a value of 1.0. Based on the City’s 2002 Water Master Plan, the Water Utility’s maximum day (max day) demand is 1.5 times the ADD. The maximum hourly (max hour) demand is 1.8 times the ADD.

Based on the City’s 2014 Strategic and Master Planning Report, 2002 Water Master Plan, the Recycled Water Utility’s max day demand is 1.7 times the ADD. The max hour demand is 2.38 times the ADD.

The costs associated with facilities required to meet maximum day demand are allocable to base and maximum day extra capacity as shown below for the Water Utility. Recycled Water Utility would use a similar allocation based on its respective max day and max hour ratios.  Base = (1.0/1.5) x 100 = 66.7%
 Max Day = (1.5 – 1.0)/1.5 x 100 = 33.3%
These calculations indicate that the average or base use requires 66.7% of the capacity of facilities designed and generated to meet maximum day demand, and the remaining 33.3% meets maximum day extra capacity requirements.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

28 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 The costs associated with facilities required to meet maximum hour demand are allocable to base, maximum day extra capacity and maximum hour extra capacity as follows:
 Base = (1.0/1.8) x 100 = 55.6%
 Max Day = (1.5 – 1.0)/1.8 x 100 = 27.7%
 Max Hour = (1.8 – 1.5)/1.8 x 100 = 16.7%

3.2.2 Allocation of Operating and Maintenance Expenses
In allocating O&M expenses for TY 2023, costs are directly allocated to the cost components to the extent possible. The Water and Recycled Water Utilities book operating costs by functional categories. Therefore, Black & Veatch used the factors noted in Section 3.1 to allocate the operating expenses to the cost components. The study based the allocation of Administration and Transfer cost elements on the average of all other costs. The direct assignment represents fire protection and cross- connections for the Water Utility. Table 3-3 and Table 3-4 represent the allocation of O&M to the cost components. Next, revenues are subtracted from other sources as shown in Table 3-1, Lines 12 and 15 and Table 3-2, Lines 7 and 10. The analysis deducts any drawdown of available cash balances and normalizes the rate adjustments for a full year to determine the net O&M costs for each utility.

Table 3-3 Allocation of O&M Expenditures (Water)

Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($) ($)
Water Utility
Operating Expenses
1532 Solar System Maintenance 270,000 0 0 0 270,000 0 0 0 1 1422 Water System Maintenance
2 Customer Servi ce 326,700 0 0 0 0 326,700 0 0 3 Backfl ow Preventi on 848,200 0 0 0 0 0 0 848,200 4 A ll Othe r 692,000 378,000 191,800 115,300 0 0 6,900 0 1423 Water Construction 3,668,300 2,003,600 1,016,600 611,400 0 0 36,700 0 5 1424 Water System Operations
6 Generation & Pumping 1,048,700 689,400 348,800 0 0 0 10,500 0 7 Custom e r Billing & Me te r Re ading 730,800 0 0 0 0 730,800 0 0 8 Meters 350,800 0 0 0 350,800 0 0 0 Hydrants 1,233,700 0 0 0 0 0 1,233,700 0 9 A ll Othe r 6,128,000 3,347,100 1,698,300 1,021,300 0 0 61,300 0 10 1411 Administration Design 4,440,600 3,047,700 299,300 160,700 603,300 97,200 154,400 78,000 11 1412 Water Quality 280,200 227,000 0 0 50,400 0 2,800 0 12 1413 Water Resources
Water Purchase 32,129,300 26,024,700 0 0 5,783,300 0 321,300 0 13 A ll Othe r 597,000 483,500 0 0 107,500 0 6,000 0 14 Transfers 199,400 136,900 13,400 7,200 27,100 4,400 6,900 3,500 15 Total O&M Expenses 52,943,700$ 36,337,900$ 3,568,200$ 1,915,900$ 7,192,400$ 1,159,100$ 1,840,500$ 929,700$ Less Other Revenue
16 Mi scel l aneous Revenues 1,078,300 740,100 72,700 39,000 146,500 23,600 37,500 18,900 17 Other Adjustments (3,649,400) (2,504,600) (246,000) (132,100) (495,800) (79,900) (126,900) (64,100) 18 Net Operati ng Expenses 55,514,800$ 38,102,400$ 3,741,500$ 2,009,000$ 7,541,700$ 1,215,400$ 1,929,900$ 974,900$ Line No. Description Total Costs
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 29 Table 3-4 Allocation of O&M Expenditures (Recycled Water)

3.2.3 Allocation of Capital Investments
In allocating the capital investment for TY 2023, the existing fixed assets (which serve as a proxy for the current capital investments) are allocated directly to cost components to the extent possible. The allocation of costs in this manner provides a basis for annual investment in water and recycled water system facilities. Plan capital costs can be allocated using the distribution of total net system investment across the functional cost components. Table 3-5 and Table 3-6 show the total allocation of existing system investment serving water and recycled water customers. The total net system investment of $51.2M shown on Line 11 for the Water Utility and $1.1M on Line 9 for the Recycled Water Utility represents the Test Year original cost less accumulated depreciation of the system in service. The total net system investment reflects the Water and Recycled Water Utilities fixed asset listing ending June 30, 2021. This value represents the original cost (book value) of the assets.

Table 3-5 Allocation of Capital Costs (Water)

Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
Operating Expenses
1 1522 System Maintenance
2 Water Purchase 5,761,600 5,761,600 0 0 0 0 3 Custom e r Billing & Me te r Re ading 3,700 0 0 0 0 3,700 4 Meters 407,400 0 0 0 407,400 0 5 A ll Othe r 294,700 123,800 86,700 84,200 0 0 6 1525 South Bay Water Recycling System 349,200 205,400 143,800 0 0 0 7 Transfers 9,800 8,800 300 100 600 0 8 Total O&M Expenses 6,826,400$ 6,099,600$ 230,800$ 84,300$ 408,000$ 3,700$ Less Other Revenue
9 Mi scel l aneous Revenues 505,700 451,900 17,100 6,200 30,200 300 10 Other Adjustments (127,500) (113,900) (4,300) (1,600) (7,600) (100) 11 Net Operati ng Expenses 6,448,200$ 5,761,600$ 218,000$ 79,700$ 385,400$ 3,500$ Total CostsDescriptionLine No.

Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection C onne ction ($) ($) ($) ($) ($) ($) ($) ($)
Water Utility
Plant Assets
1 Water Production 12,273,700 9,941,700 0 0 2,209,300 0 122,700 0 2 Pumping 3,354,800 2,205,600 1,115,700 0 0 0 33,500 0 3 Treatment 992,000 652,200 329,900 0 0 0 9,900 0 4 Transm ission & Distribution 25,288,400 13,812,600 7,008,200 4,214,700 0 0 252,900 0 5 Meters & Servi ces 7,077,100 0 0 0 7,077,100 0 0 0 6 Fire Hydrants 648,400 0 0 0 0 0 648,400 0 7 General Pl ant 1,525,900 818,100 259,900 129,600 285,500 0 32,800 0 8 Total Plant Assets 51,160,300$ 27,430,200$ 8,713,700$ 4,344,300$ 9,571,900$ 0$ 1,100,200$ 0$ Less Other Revenue
9 Mi scel l aneous Revenues 0 0 0 0 0 0 0 0 10 Other Adjustments 0 0 0 0 0 0 0 0 11 Net Capi tal Expenses 51,160,300$ 27,430,200$ 8,713,700$ 4,344,300$ 9,571,900$ 0$ 1,100,200$ 0$ Line No. Description Total Costs
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

30 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 3-6 Allocation of Capital Costs (Recycled Water)

3.3 UNITS OF SERVICE
To properly recognize the cost of service, each customer class receives its share of base, maximum day, peak hour, and customer costs. Following the allocation of costs, the total cost responsibility for each customer class is developed using unit costs of service for each cost function and subsequently assigning those costs to the customer classes based on the respective service requirements of each. The number of units of service required by each customer class provides a means for the proportionate distribution of costs previously allocated to respective cost categories.

Table 3-7 summarizes the estimated TY 2023 units of service for the various customers. Base costs vary with the volume of water consumed and distributed to the customers on that basis. Extra Capacity costs are those associated with meeting peak demand rates of water use and distributed to the customers based on the respective class capacity requirements in excess of average rates of use. Black & Veatch followed the capacity factor methodology outlined in Appendix A of the AWWA M1 Manual to derive peak consumption information from the monthly consumption records in the City’s Customer Information System which helps provide the basis for estimating maximum day and peak hour ratios.

The number of bills for each customer serves as the basis for distributing customer billing requirements.

Customer meter requirements are allocated on an equivalent meter’s basis for each customer. The estimated number of equivalent meters for each customer relies on the total number of meters serving respective classes and the hydraulic capacity ratio of the meters to the 5/8 x 3/4-inch meter. The equivalent meter ratios adopted in this analysis are consistent with the AWWA M1 Manual. Private fire- protection costs allocations use equivalent fire hydrants.

3.4 COST OF SERVICE ALLOCATIONS
The Study applies the unit costs of service to each customer class’ respective service requirements to determine the cost of service for each customer class. The total unit costs of service applied to the respective requirements for each customer class results in the total cost of service for each customer class.

Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
Plant Assets
1 Water Production 0 0 0 0 0 0 2 Pumping 0 0 0 0 0 0 3 Treatment 0 0 0 0 0 0 4 Transm ission & Distribution 1,131,400 475,300 332,800 323,300 0 0 5 Meters 0 0 0 0 0 0 6 Total Plant Assets 1,131,400$ 475,300$ 332,800$ 323,300$ 0$ 0$ Less Other Revenue
7 Mi scel l aneous Revenues 0 0 0 0 0 0 8 Other Adjustments 0 0 0 0 0 0 9 Net Capi tal Expenses 1,131,400$ 475,300$ 332,800$ 323,300$ 0$ 0$ Line No. Description Total Costs
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 31

3.4.1 Units Costs of Service
The TY 2023 unit cost of service for each functional cost component is simply the total cost divided by the applicable units of service, as shown in Table 3-8 and Table 3-10. On Line 4, the total costs represent the cost that rates need to recover, as demonstrated in Table 3-1, Line 16 for the Water Utility, and Table 3-2, Line 11 for the Recycled Water Utility. The net O&M cost includes O&M (including water purchase) less revenue from other sources and adjustments. The total capital cost includes debt service payments and transfers to the Construction Fund. Line 6 represents the unit costs for the entire water and recycled water systems regardless of customer classes. After that, the unit costs are used to allocate the costs to the specific customer classes.

3.4.2 Distribution of Costs of Service to Customer Classes Applying the unit costs to the units for each customer class produces the customer class costs. This process is illustrated in Table 3-9 and Table 3-11, in which unit costs are applied to the customer class units of service for T Y 2023 . The costs attributable to each customer class reflect the functional cost components described in Section 3 .1. Each customer class places a burden on the system in differe nt ways, and thus the allocation of the units is representative of this burden.

An example of the application of unit costs is shown below for illustrative purposes.

Base Component
Uni t Cost (Tabl e 3-5, Li ne 6) 5.39$ per HCF G
eneral Customer Consumption (Table 3-6, Line 2) 7,066,384 HCF Total Allocated Cost 38,102,400$
Please note that the numbers within the tables are rounded, yet the calculations are done based on non-rounded values; therefore, results might vary.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara 32 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 3-7 Units of Service (Water and Recycled Water)

Consumption Maximum Day Maximum Day Fire Cross
Annual Avg. Day Factor Total Extr a Factor Total Extra Meters Cust/Bills Protection Connection Col umn Reference (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Units of Measure (HCF) (HCF/day) (HCF/day) (HCF/day) (HCF/day) (HCF/day) (EMs) (bills) (EHs) (EMs) Water Utility
1 General Customer 7,066,384 19,360 165% 31,944 12,584 250% 48,400 16,456 45,125 315,558 0 0 2 Subtotal 7,066,384 19,360 31,944 12,584 48,400 16,456 45,125 315,558 Fire Service
3 Public Fire 0 0 552 552 4,418 3,866 0 0 3,248 0 4 Pri vate Fi re 0 0 290 290 2,319 2,030 0 15,079 1,705 0 5 Subtotal 0 0 842 842 6,738 5,896 0 15,079 4,953 0 Cross Connection
6 Cross Connection 32,306 0 7,693 7 Subtotal 0 0 0 0 0 0 0 32,306 0 7,693 8 Total Water System 7,066,384 19,360 32,786 13,426 55,138 22,352 45,125 362,943 4,953 7,693 Recycled Water Utility
9 General Customer 1,550,341 4,248 130% 5,522 1,274 190% 8,070 2,549 2,233 3,150 0 0 10 Subtotal 1,550,341 4,248 5,522 1,274 8,070 2,549 2,233 3,150 0 0 DescriptionLine No.
-------
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis
Table 3-8 Units Cost of Service (Water)

Table 3-9 Distribution of Costs to Customer Classes (Water)

Table 3-10 Units Cost of Service (Recycled Water)

Table 3-11 Distribution of Costs to Customer Classes (Recycled Water)

Common to All Customers
Base Extra Capacity Customer Fire Cross
Base M
ax. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($)
Water Utility
1 Net Operati ng Expense 55,514,800 38,102,400 3,741,500 2,009,000 7,541,700 1,215,400 1,929,900 974,900 2 Debt Servi ce 0 0 0 0 0 0 0 0 3 Capital Costs 0 0 0 0 0 0 0 0 4 Total Cost of Service 55,514,800$ 38,102,400$ 3,741,500$ 2,009,000$ 7,541,700$ 1,215,400$ 1,929,900$ 974,900$ 5 Units of Se rvice (Total) 7,066,384 13,426 22,352 45,125 362,943 4,953 7,693 HCF HCF/Day HCF/Day Eq. Meters Bills Eq. Hydrants Eq. Meters 6 Cost per Unit 5.39$ 278.67$ 89.88$ 167.13$ 3.35$ 389.64$ 126.73$ per HCF per HCF/Day per HCF/Day per Eq. Meter pe r Bill per Eq. Hydrant per Eq. Meter Line No. Description Total Costs
Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($)
Water Utility
General Customer
1 Units 7,066,384 12,584 16,456 45,1 25 315,558 0 0 2 Allocation of costs of service 51,686,700 38,102,400 3,506,800 1,479,100 7,541,700 1,056,700 0 0 Public Fire
3 Units 0 552 3,866 0 0 3,248 0 4 Allocation of costs of service 1,766,900 0 153,900 347,500 0 0 1,265,500 0 Private Fire
5 Units 0 290 2,030 0 15,079 1,705 0 6 Allocation of costs of service 978,100 0 80,800 182,400 0 50,500 664,400 0 Cross Connection
7 Units 0 0 0 0 32,306 0 7,693 8 Allocation of costs of service 1,083,100 0 0 0 0 108,200 0 974,900 7 TOTAL COSTS OF SERVICE 55,514,800$ 38,102,400$ 3,741,500$ 2,009,000$ 7,541,700$ 1,215,400$ 1,929,900$ 974,900$ Line No. Description Total Costs
Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
1 Net Operati ng Expense 5,862,000 5,237,800 198,200 72,400 350,400 3,200 2 Debt Servi ce 0 0 0 0 0 0 3 Capital Costs 0 0 0 0 0 0 4 Total Cost of Service 5,862,000$ 5,237,800$ 198,200$ 72,400$ 350,400$ 3,200$ 5 Units of Se rvice (Total) 1,550,341 1,274 2,549 2,233 3,150 HCF HCF/Day HCF/Day Eq. Meters Bills
6 Cost per Unit 3.38$ 155.54$ 28.41$ 156.94$ 1.02$ per HCF per HCF/Day per HCF/Day per Eq. Meter pe r Bill Total CostsLine No. Description
Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
General Customer
1 Units 1,550,341 1,274 2,549 2,233 3,150 2 Allocation of costs of service 5,862,000 5,237,800 198,200 72,400 350,400 3,200 3 TOTAL COSTS OF SERVICE 5,862,000$ 5,237,800$ 198,200$ 72,400$ 350,400$ 3,200$ Line No. Description Total Costs
E
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

34 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 4 Rate Design
The initial consideration in the derivation of rate schedules for water and recycled water service is establishing equitable charges to the customers commensurate with the cost of providing that service.

While the cost-of-service allocations to customer classes should not be construed as literal or exact determinations, they offer a guide to the necessity for, and the extent of, rate adjustments. Practical considerations sometimes modify rate adjustments by considering additional factors such as the extent of bill impacts, existing contracts, and historical local policies and practices.

4.1 EXISTING RATES
The existing rates of the Water and Recycled Water Utilities consist of a fixed component in the form of a minimum monthly service charge and a variable component in the form of a consumption charge. The minimum monthly service charge is based on meter size and applied when consumption does not exceed the consumption allowance. The consumption charge is based on units of consumption (1 unit = 1 HCF = 748 gallons). The City has separate fixed charges for fire services and cross- connections. Table 2-3, presented earlier in this report, summarizes the existing water and recycled water rates.

4.2 PROPOSED RATES
The cost-of-service analysis described in the preceding sections of this report provides a basis for the design of water and recycled water rates.

4.2.1 Monthly Service Charge
Black & Veatch used meter ratios based on maximum operating capacities by meter size as shown in AWWA M1, Table B-1, which recognizes that as meter size increases, so does the capacity. For example, customers with a 4” meter expects to be able to use more water (at a higher flow capacity) than customers with a ¾” meter. Consequently, the City’s water system must maintain assets sized accordingly and capable of providing customers the level of service expected from their meter connection when the tap turns on. The minimum monthly service charge recovers a portion of the costs associated with wholesale water purchase, meter maintenance and services, meter reading, bill issuance, and maintenance and capacity costs associated with public fire protection regardless of the level of water consumed.

Table 4-1 demonstrates the water cost elements incorporated into the minimum monthly service charge for FY 2023. Table 4-2 shows the Water Utility three-year fixed service charge rate schedule.

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 35
Table 4-1 Costs within the Minimum Monthly Service Charge for FY 2023 (Water)

Table 4-2 Proposed Minimum Monthly Service Charge (Water)

Table 4-3 demonstrates the recycled water cost elements incorporated into the minimum monthly service charge for FY 2023. Table 4-4 shows the Recycled Water Utility three-year fixed service charge rate schedule.

Table 4-3 Costs within the Minimum Monthly Service Charge for FY 2023 (Recycled Water)

Meter & Public Fire Protection Billing
Meter Mtr Unit FP Unit Meter Adjusted Adjusted Total Service Size Cost Cost Ratio Unit Cost Unit Cost Bill Ratio Unit Cost Charge per EM per EM $ pe r Bill $ $/Month
5/8" x 3/4" 13.93 3.26 1.00 17.19 3.35 1.00 3.35 20.54 1" 13.93 3.26 1.67 28.65 3.35 1.00 3.35 32.00 1-1/2" 13.93 3.26 3.33 57.30 3.35 1.00 3.35 60.65 2" 13.93 3.26 5.33 91.68 3.35 1.00 3.35 95.03 3" 13.93 3.26 10.67 183.36 3.35 1.00 3.35 186.71 4" 13.93 3.26 16.67 286.51 3.35 1.00 3.35 289.85 6" 13.93 3.26 33.33 573.01 3.35 1.00 3.35 576.36 8" 13.93 3.26 53.33 916.82 3.35 1.00 3.35 920.17 10" 13.93 3.26 80.00 1,375.23 3.35 1.00 3.35 1,378.58 12" 13.93 3.26 112.50 1,933.91 3.35 1.00 3.35 1,937.26 Proposed
Customer Class FY 2 023 FY 2024 FY 2025
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 20.54 22.25 24.09 1" 32.00 34.84 37.86
1-1/2" 60.65 66.31 72.28
2" 95.03 104.08 113.58
3" 186.71 204.79 223.73
4" 289.85 318.09 347.65
6" 576.36 632.81 691.86
8" 920.17 1,010.48 1,104.92
10" 1,378.58 1,514.04 1,655.66
12" 1,937.26 2,127.75 2,326.88
Meter Services Billing
Meter Mtr Unit Meter Adjusted Adjusted Total Service
Size Cost Ratio Unit Cost Unit Cost Bill Ratio Unit Cost Charge per EM $ pe r Bill $ $/Month
5/8" x 3/4" 14.38 1.00 14.38 1.11 1.00 1.11 15.50 1" 14.38 1.67 23.97 1.11 1.00 1.11 25.09 1-1/2" 14.38 3.33 47.95 1.11 1.00 1.11 49.06 2" 14.38 5.33 76.72 1.11 1.00 1.11 77.83 3" 14.38 10.67 153.44 1.11 1.00 1.11 154.55 4" 14.38 16.67 239.74 1.11 1.00 1.11 240.85 6" 14.38 33.33 479.48 1.11 1.00 1.11 480.60 8" 14.38 53.33 767.18 1.11 1.00 1.11 768.29 10" 14.38 80.00 1,150.76 1.11 1.00 1.11 1,151.87 12" 14.38 112.50 1,618.26 1.11 1.00 1.11 1,619.37 Updated 2022 Water and Sewer Rate Study | City of Santa Clara

36 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 4-4 Proposed Minimum Monthly Service Charge (Recycled Water)

4.2.2 Fire Service
The fire service charge includes costs of issuing bills and maintenance and capacity costs associated with private fire protection. The fire service charge increases as pipeline diameter size increases. The Water Utility provides fire service to approximately 1,255 private fire service accounts.

These customers have a water line connection to the water system specifically for fire protection. The Water Utility must design, operate, and maintain a water system that can meet peak fire demand requirements to meet fire protection demands. The Water Utility charges these accounts a fire service charge based on the diameter of the line that connects their fire protection system to the water system.

Table 4-5 demonstrates the costs incorporated into the fire service charge, and Table 4-6 shows the three-year rate schedule based on unit costs in future years.

Table 4-5 Costs within the Fire Service Charge for FY 2023

Proposed
Customer Class FY 2 023 FY 2024 FY 2025
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 15.50 16.94 18.63 1" 25.09 27.55 30.35
1-1/2" 49.06 54.07 59.65
2" 77.83 85.90 94.80
3" 154.55 170.77 188.56
4" 240.85 266.24 294.04
6" 480.60 531.46 587.02
8" 768.29 849.72 938.61
10" 1,151.87 1,274.06 1,407.39
12" 1,619.37 1,791.24 1,978.72
Private Fire Protection Total
Meter U
nit Meter Adjusted Service
Size Cost Ratio Unit Cost Charge
per EH $/Month
2" 47.80 0.06 2.87 2.87 4" 47.80 0.34 16.25 16.25 6" 47.80 1.00 47.80 47.80 8" 47.80 2.13 101.82 101.82 10" 47.80 3.83 183.09 183.09 12" 47.80 6.19 295.91 295.91 City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 37
Table 4-6 Proposed Fire Service Charge

4.2.3 Cross Connection
The cross-connection charge includes costs of issuing bills and maintenance and replacement costs associated with backflow devices. The cross-connection charge increases as pipeline diameter size increases. The Water Utility provides backflow services to approximately 2,689 accounts. These customers have a backflow device that prevents possible contaminated water from entering the water system. The Water Utility maintains and replaces the devices accordingly to ensure that the devices are working properly. The Water Utility charges the accounts a cross-connection charge based on the diameter of the line that connects their service to the water system. Table 4-7 demonstrates the costs incorporated into the cross-connection charge, and Table 4-8 shows the three-year rate schedule.

Table 4-7 Costs within the Cross-Connection Charge for FY 2023

Table 4-8 Proposed Cross Connection Charge

Proposed
Customer Class FY 2023 FY 2024 FY 2025
Fire Service ($/Month) $/month $/month $/month
2" 2.87 2.95 3.07
4" 16.25 16.72 17.41
6" 47.80 49.19 51.20
8" 101.82 104.77 109.06
10" 183.09 188.39 196.11
12" 295.91 304.48 316.95
Cross Connection Total
Meter Unit Meter Adjusted Service
Size Cost Ratio Unit Cost Charge
per EM $/Month
1" 11.73 0.63 7.33 7.33 2" 11.73 1.00 11.73 11.73 3" 11.73 2.00 23.47 23.47 4" 11.73 3.13 36.67 36.67 6" 11.73 6.25 73.33 73.33 8" 11.73 10.00 117.33 117.33 10" 11.73 15.00 175.99 175.99 Proposed
Customer Class FY 2023 FY 2024 FY 2025
Cross Connection ($/Month) $/month $/month $/month
1" 7.33 7.47 7.70
2" 11.73 11.95 12.32
3" 23.47 23.91 24.64
4" 36.67 37.35 38.50
6" 73.33 74.71 76.99
8" 117.33 119.53 123.19
10" 175.99 179.30 184.79
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

38 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

4.2.4 Consumption Charge
This consumption charge is designed to recover costs associated with the base and extra capacity demands. These costs include fixed and variable costs incurred by the water and recycled water system while providing the average annual usage and peaking demands. While most of the costs are fixed, such as personnel and direct and indirect charges, variable costs represent most of the costs through water production and water purchase. Table 4-9 shows the three-year rate schedule for both the Water and Recycled Water Utilities. For the Recycled Water Utility, the industrial process is part of general customers.

Table 4-9 Proposed Consumption Charges

4.3 DROUGHT CONDITIONS

4.3.1 Water Shortage Contingency Plan
The City d eveloped a six -stage Water Shortage Contingency Plan in the 20 20 Urban Water Management Plan that complies with the SWRCB’s regulations. Table 4-10 shows that the plan includes the percent supply reduction and water supply condition for the different stages within the plan.

Table 4-10 Stages of Water Shortages Contingency Plan
STAGES

PERCENT
SUPPLY

REDUCTION

WATER SHORTAGE

CONDITION SHORTAGE RESPONSE ACTION
1 ≤10% Advisory/Voluntary Voluntary conservation
Increase public information campaigning
Increase educational programs
2 11-20% Mandatory Water use restrictions
Allocations and mandatory conservation
Required reductions
Drought surcharges and increased rates
Increase production monitoring
Increase use of non-potable water
Reduce system flushing
3 21-30%
4 31-40%
5 41-50%
6 >50% Emergency Curtailment Water use for decorative water features prohibited Prohibit landscape irrigation
Increase use of non-potable water
Source: 2020 Urban Water Management Plan, Table 8-11: WSCP Levels Proposed
Customer Class FY 2023 FY 2024 FY 2025
$/HCF $/HCF $/HCF
Consumption Charges ($/HCF)
Water Utility
General Customer 7.33 7.99 8.71 Recycled Water Utility
General Customers 4.12 4.53 4.99 City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 39

4.3.2 Drought Surcharges
Table 4-11 shows the drought surcharges that have been developed for each 10 percent supply reduction associated with transitioning through the stages in the Water Shortage Contingency Plan.

These charges are not proposed to be included in the rates at this time, but should drought conditions continue to worsen, City staff may return to Council at a later date for consideration of these surcharges. For this Study's purposes, current conditions represent the projected baseline consumption for each fiscal year. The projected baseline provides an expected revenue for the fiscal year. Under drought conditions, consumption decreases, and thus additional revenue is required for recovery from a drought surcharge. The drought surcharge is calculated by dividing the revenue loss by the reduced usage after accounting for the reduction in water supply costs associated with Valley Water and SFPUC water purchases.

Table 4-11 Proposed First Year Drought Charges, FY 2023

Using the same methodology per fiscal year, Table 4-12 shows the proposed three-year drought surcharges for each additional percentage of savings.

Table 4-12 Proposed Three-Year Drought Charges

4.4 TYPICAL MONTHLY COSTS UNDER PROPOSED CHARGES
Table 4-13 and Table 4-14 compare typical monthly costs under existing rates and the proposed schedule of water and recycled water user rates derived in this study.

Additional Conservation compared to Baseline
Description Baseline 10% 20% 30% 40% 50%
Greater than
50%
Projected Consumption (HCF) 7,390,708 7,3 90,708 7,390,708 7,390,708 7,390,708 7,390,708 7,390,708 Reduction in Consumption (HCF) (739,071) (1,478,142) (2,217,212) (2,956,283) (3,695,354) (4,434,425) Net Consumption (CCF) 7,390,708 6,651,637 5,912,566 5,173,496 4,434,425 3,695,354 2,956,283 Projected Consumption Rates ($/HCF) $7.33 $7.33 $7.33 $7.33 $7.33 $7.33 $7.33 Projected Consumption Revenue $54,177,866 $48,760,078 $43,342,290 $37,924,509 $32,506,720 $27,088,932 $21,671,144 Total Revenue $54,177,866 $48,760,078 $43,342,290 $37,924,509 $32,506,720 $27,088,932 $21,671,144 Revenue Lost $5,417,788 $10,835,577 $16,253,358 $21,671,146 $27,088,934 $32,506,723 Reduced Water Sol d + Water Loss 776,025 1,552,049 2,328,073 3,104,097 3,880,122 4,656,146 Bl ended Whol esal e Water Costs $3.76 $3.76 $3.76 $3.76 $3.76 $3.76 Reduced Cost of Whol esal e Water ($2,921,600) ($5,843,300) ($8,764,900) ($11,686,500) ($14,608,200) ($17,529,800) Revenue Lost due to Reducti on $5,417,788 $10,835,577 $16,253,358 $21,671,146 $27,088,934 $32,506,723 Less Reducti on of Water Whol esal e Costs ($2,921,600) ($5,843,300) ($8,764,900) ($11,686,500) ($14,608,200) ($17,529,800) Revenue to be recovered by drought surcharges $2,496,188 $4,992,277 $7,488,458 $9,984,646 $12,480,734 $14,976,923 Drought Surcharge on Consumption ($/HCF) $0.38 $0.84 $1.45 $2.25 $3.38 $5.07 Additional Conservation compared to Baseline
Description 10% 20% 30% 40% 50%
Greater than
50%1
FY 2023 $0.38 $0.84 $1.45 $2.25 $3.38 $5.07
FY 2024 $0.38 $0.86 $1.48 $2.30 $3.45 $5.17
FY 2025 $0.39 $0.88 $1.50 $2.33 $3.50 $5.25

1. Greater than 50% represents surcharge up to 60%. Anything larger will need to be calculated.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

40 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 4-13 Typical Monthly Bill (Water)

Table 4-14 Typical Monthly Bill (Recycled Water)

4.5 NEIGHBORING WATER UTILITIES
Presented in Figure 4-1 are the proposed rates compared to rates of neighboring cities for a single-family residential customer with a 5/8” x ¾” meter consuming 12 units of water. Based on the comparison, the City is currently one of the lowest water providers in the area. With the proposed rate increases, the City remains the lowest water provider of the surveyed communities. All surveyed community rates are current as of May 2022.

Typical FY 2022 FY 2 023
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Water Utility
General Customer 0 $19.81 $20.54
3 $19.81 $20.54
5 $33.45 $36.65
10 $66.90 $73.31
12 $80.28 $87.97
20 $133.80 $146.61
30 $200.70 $219.92
40 $267.60 $293.22
50 $334.50 $366.53
Typical FY 2022 FY 2 023
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Recycled Water Utility
General Customer 0 $18.90 $15.50
3 $18.90 $15.50
5 $18.70 $20.61
10 $37.40 $41.22
12 $44.88 $49.47
20 $74.80 $82.44
30 $112.20 $123.66
40 $149.60 $164.89
50 $187.00 $206.11
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 41
Figure 4-1 Comparison to Neighboring Water Utilities

Santa
Clara
Current
Santa
Clara
Proposed
San Jose
Proposed
Sunnyvale
Proposed SJWC
Mountain
View
Proposed
Milpitas Palo Alto
Proposed
WATER RATE 12 HCF $80.28 $87.96 $104.43 $78.71 $157.52 $106.99 $110.41 $152.04 SEWER RATE $44.53 $46.82 $45.49 $55.52 $45.49 $50.10 $62.07 $44.62 COMBINED $124.81 $134.78 $149.92 $134.23 $203.01 $157.09 $172.48 $196.66 $0.00
$50.00
$100.00
$150.00
$200.00
$250.00
Monthly Bill
■
■
■
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

42 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Sewer Rate Study
5 Revenue and Revenue Requirements
To meet the costs associated with providing sewer services to its customers, the Sewer Utility derives revenue from a variety of sources, including sewer user charges (rates), outlet charges, conveyance fees, connection charges, interest earned from the investment of available funds, engineering fees, and other miscellaneous revenues. The Sewer Utility is constantly looking for other sources of revenue, such as loans, bonds, and grants. Black & Veatch has projected the level of future revenue generated in the Study through an analysis of historical and future system growth in terms of the number of EDUs, bills, and contributed sewage flow. This section also projects the expenses, or revenue requirements, necessary to operate and maintain the system, invest in capital improvements, make debt service payments, and cover other sewer system expenses.

5.1 CUSTOMER AND WATER CONSUMPTION PROJECTIONS

5.1.1 Customer Classes
The Sewer Utility’s customers include both residential and non-residential customers. The City has the following customer classes:
 Residential: Single-family and multi-family residential are separate classes  Non-Residential: Amusement Parks; Auto Dealers & Service Stations; Churches; Electric & Electronic Equipment; Food & Kindred Products; Hospitals & Convalescent Homes; Industrial Chemical; Industrial Water Treatment; Laundries; Machinery Manufacturers; Metal Plating; Motels & Hotels; Paper; Repair Shops & Car Washes; Restaurants; Schools & Colleges; and Commercial/Industrial/Miscellaneous (catch-all for remainder of non-residential customers).  Major Users: Major Users customer class is composed of major commercial and industrial users who are identified based on the following3:
• Have a sewage discharge of at least 25,000 gallons per day; or • Have a daily discharge that is intermittent or irregular in strength, amount, or nature.

5.1.2 Equivalent Dwelling Units
The City provides sewer services to over 26,000 customers. All customers generating sewage flow connect to the sewer system. Since the City bills residential customers based on EDUs, a review of historical EDUs patterns for customers, and anticipated growth within the City, the projected total number of EDUs is expected to grow at 0.1% annually over the Study period. An EDU represents a single-

3 City Website, Schedule S-16 Monthly Sewer Service Charges, <http://www.santaclaraca.gov/government/departments/water-sewer-utilities/water-sewer-and-recycled-water- rates/sewer-rates>
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 43 family residential customer equivalent with a flow of 245 gallons per day and strengths of 250 mg/L of Biological Oxygen Demand (BOD), 250 mg/L of Total Suspended Solids (TSS), and 35 mg/L of Ammonia (NH3).

Table 5-1 summarizes the projected number of EDUs for the Sewer Utility.

Table 5-1 EDUs

5.1.3 Minimum Bills
The City bills non-residential customers primarily on contributed sewage flow and imposes a minimum bill on those whose flow charges do not exceed the included volume allowance within the monthly service charge. The City refers to these bills as minimum monthly service bills. Therefore, a review of historical minimum bills patterns for non-residential customers and anticipated growth within the City, the projected total number of minimum bills are expected to grow 0.5% annually over the Study period.

Table 5-2 summarizes the projected number of minimum monthly service bills for the Sewer Utility.

Table 5-2 Minimum Monthly Service Bills

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
(EDUs) (EDUs) (EDUs)
1 Single Fam ily 256,722 256,979 257,236 2 Multi Fam ily 303,033 303,336 303,639 3 Total 559,755 560,315 560,875
Line No. Description
Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
(Bills) (Bills) (Bills)
1 Amusement Parks 122 123 124 2 Auto Deal ers & Servi ce Stati on 376 378 380 3 Churches 243 244 245 4 Com m e rcial/Industrial/Misce llane ous 9,929 9,979 10,029 5 Electric & Electronic Equip. 392 394 396 6 Food and Kindred Products 23 23 23 7 Hospi tal s & Conval escent Homes 309 311 313 8 Industrial Chemical 52 52 52 9 Laundries 117 118 119 10 Machinery Manufacturers 681 684 687 11 Me tal Plating 94 94 94 12 Motel s & Hotel s 42 42 42 13 Paper 13 13 13 14 Repair Shops & Car Washes 478 480 482 15 Restaurants 245 246 247 16 Schools & Colleges 512 515 518 17 Total 13,628 13,696 13,764
Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

44 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

5.1.4 Contributed Sewage Flow
The City charges all its non-residential customers based on contributed sewage flow, which is determined by multiplying water consumption by a return factor. In determining the projected sewage flow, Black & Veatch analyzed historical sewage flow patterns in conjunction with a projected estimate of future water consumption. Since 2016, water consumption has slowly increased from historic lows experienced during mandated drought restrictions. Despite the increase, the City’s Water Shortage Contingency Plan remains in effect, and customers have made conservation a way of life. The Water Utility, therefore, expects consumption to continue to rebound slowly. Past experience would indicate that after strict water conservation measures are lifted, the rebound in consumption is usually associated with discretionary water such as irrigation. Much of this water does not make it to the sewer system; therefore, the City projects that sewage flow will grow by 0.5% annually over the Study period.

Table 5-3 shows the projected sewage flow generated for the Study period. The City contributed sewage flow in units of HCF for non-residential customers.

Table 5-3 Contributed Sewage Flow

5.1.5 Major Users
The City charges major commercial and industrial sewer customers based on contributed sewage flow and strength loadings. Major users are identified individually, as each customer places different burdens on the sewer system. The City had one identified Major User customer.

Table 5-4 shows the flow and loadings associated with this customer over the Study period.

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
(HCF) (HCF) (HCF)
1 Amusement Parks 67,228 67,564 67,902 2 Auto Deal ers & Servi ce Stati on 22,013 22,123 22,234 3 Churches 17,778 17,867 17,956
4 Com m e rcial/Industrial/Misce llane ous 1,293,400 1,299,867 1,306,366 5 Electric & Electronic Equip. 496,422 498,904 501,399 6 Food and Kindred Products 19,040 19,135 19,230 7 Hospi tal s & Conval escent Homes 94,511 94,984 95,459 8 Industrial Chemical 13,903 13,973 14,043 9 Laundries 25,892 26,021 26,151
10 Machinery Manufacturers 39,414 39,611 39,809 11 Me tal Plating 7,009 7,044 7,079 12 Motel s & Hotel s 116,133 116,714 117,298 13 Paper 149,741 150,490 151,242
14 Repair Shops & Car Washes 12,231 12,292 12,353 15 Restaurants 80,611 81,014 81,419 16 Schools & Colleges 43,584 43,802 44,021 17 Total (HCF) 2,498,910 2,511,405 2,523,961
18 Total (AF) 5,737 5,765 5,794 Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 45 Table 5-4 Major Users

5.2 REVENUE UNDER EXISTING RATES
Sewer user rates serve as the primary source of revenue for the Sewer Utility. Therefore, the level of future rate revenue is important in developing a long-range financial plan. Rate revenue is determined by multiplying the projected system growth in terms of the number of EDUs, minimum monthly service bills, contributed sewage flow, and major user flow and loadings by the applicable rates to determine sewer rate revenue.

Table 5-5 shows the Sewer Utility’s current schedule of charges. It is important to note that the minimum monthly service charge applies to non-residential customers that do not exceed the base amount. Therefore, the minimum monthly service charge serves as a baseline cost that the City needs to recover. The City maintains a separate schedule of rates based on the customer classes identified in Section 5.1.

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
Major Users
Operating and Maintenance Cost Recovery
1 Vol ume (MG) 99 99 99 2 BOD (1,000 lbs) 1,027 1,027 1,027 3 SS (1,000 lbs) 460 460 460 4 NH3 (1,000 lbs) 8 8 8 Annual Capital Cost Recovery
5 Vol ume (MGD) 0.27 0.27 0.27 6 BOD (1,000 lbs/day) 2.81 2.81 2.81 7 SS (1,000 lbs/day) 1.26 1.26 1.26 8 NH3 (1,000 lbs/day) 0.02 0.02 0.02 Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

46 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 5-5 Existing Sewer Rates

Table 5-6 summarizes projected sewer rate revenue under existing rates. As shown, the revenue generated stays relatively flat over the Study period in conjunction with the number of EDUs, minimum bills, billed sewage flow, and major user volume and loadings. The projected Sewer Utility revenues increase from $40.4M in FY 2023 to $40.7M in FY 2025.

Existing Existing
FY 2
022 FY 2022
Residential ($/EDU) Major Commercial and Industrial Users Single Fam ily 44.53 Annual Capital Cost Recovery Multi-Fam ily 44.53 Vol ume (per MGD) 1,087,067 BOD [2] (per 1,000 lbs/day) 121,093
Non-Residential [1] ($/HCF) SS [3] (per 1,000 lbs/day) 54,616 Amusement Parks 5.79 NH3 [4] (per 1,000 lbs/day) 411,021 Auto Deal ers & Servi ce Stati on 6.10
Churches 5.00 Operating and Maintenance Cost Recovery Com/Ind/Misc 5.29 Vol ume (per MG) 2,667.35 Electric & Electronic Equip. 5.02 BOD [2] (per 1,000 lbs) 425.59 Food and Kindred Products 14.45 SS [3] (per 1,000 lbs) 578.32 Hospi tal s & Conval escent Homes 6.55 NH3 [4] (per 1,000 lbs) 4,902.37 Industrial Chemical 9.60
Laundries 5.76
Machinery Manufacturers 7.52
Me tal Plating 3.31
Motel s & Hotel s 7.04
Paper 11.05
Repair Shops & Car Washes 4.64
Restaurants 15.09
Schools & Colleges 5.62

1. In no case shall the minimum charge be less than $44.53 per month.

Description Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 47 Table 5-6 Projected Revenue under Existing Rates

5.3 OTHER REVENUE
Other operating sources include charges for revenue from other agencies served by Santa Clara, sewer lateral video inspections, sewer clean-out installations, interest on investments, and other miscellaneous revenues. In total, other operating revenues represent 2.5% of the Sewer Utility’s total revenue. The City anticipates that these revenues will remain relatively constant for the duration of the Study period.

5.4 OPERATING AND MAINTENANCE EXPENSES
Table 5-7 summarizes the Sewer Utility’s projected O&M expenses for the Study Period. These expenses include costs related to salaries and benefits, materials and supplies, contract and professional services, RWF costs, indirect and direct costs, and routine capital outlay. The City anticipates that all O&M expenditures, excluding Water Pollution Control Plant costs, will increase on average by 3.5% annually from the FY 2023.

The Sewer Utility receives treatment services from the RWF operated and maintained by the City of San Jose. While the City has an ownership stake in the RWF, the City must still pay for O&M associated with operating the facility. Based on the City of San Jose estimates, the City expects RWF O&M costs to increase by approximately 3.0% annually over the Study period.

Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
($) ($) ($)
1 Single Fam ily 11,431,800 11,443,300 11,454,700 2 Multi-Fam ily 13,494,100 13,507,600 13,521,000
3 Amusement Parks 394,700 396,700 398,700 4 Auto Deal ers & Servi ce Stati on 151,000 151,800 152,500 5 Churches 99,700 100,200 100,700
6 Com/Ind/Misc 7,284,200 7,320,700 7,357,300
7 Electric & Electronic Equip. 2,509,500 2,522,000 2,534,600 8 Food and Kindred Products 204,700 205,700 206,800 9 Hospi tal s & Conval escent Homes 632,800 635,900 639,200 10 Industrial Chemical 67,800 68,200 68,600 11 Laundries 154,300 155,200 155,900
12 Machinery Manufacturers 326,700 328,400 330,000 13 Me tal Plating 27,400 27,500 27,600 14 Motel s & Hotel s 819,500 823,600 827,700 15 Paper 1,271,000 1,277,400 1,283,800
16 Repair Shops & Car Washes 78,100 78,400 78,800 17 Restaurants 1,227,300 1,233,500 1,239,600
18 Schools & Colleges 267,700 269,100 270,500 19 Major Users - Customer 1 0 0 0 20 Major Users - Customer 2 0 0 0 21 Total 40,442,300$ 40,545,200$ 40,648,000$
Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

48 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 5-7 O&M Expenses

As shown in Table 5-7, the Sewer Utility’s O&M expenses increase from $31.1M in FY 2023 to $33.1M in FY 2025.

5.5 DEBT SERVICE REQUIREMENTS
Table 5-8 represents the Sewer Utility’s existing and proposed debt service obligations. This table shows the combined principal and interest requirements on the existing debt over the Study period. It is common practice for utilities to debt finance large capital improvement projects, such as in the case of Trimble Road sewer trunk line replacement in Santa Clara. By financing the cost of the projects, the City can fund large projects immediately and spread the payment over a specified time frame, thereby helping to offset the impact on ratepayers.

Table 5-8 Long-Term Debt Service

5.6 CAPITAL IMPROVEMENT PROGRAM
The Sewer Utility annually develops a five-year Capital Improvement Plan to identify sewer system needs, including ongoing assessments, maintenance, and renewal and replacement requirements.

Table 5-9 summarizes the Sewer Utility’s CIP for FY 2023 through FY 2025. The Sewer Utility is projecting $61.5M in CIP over the Study period, including capital and replacement projects. The City has posted the CIP Budget on its website for complete details associated with each CIP project.4

4 The City of Santa Clara. Finance Department. < http://santaclaraca.gov/government/departments/finance> Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
($) ($) ($)
1 Salaries 3,022,300 3,161,300 3,275,100
2 Benefi ts 1,661,700 1,743,000 1,830,000
3 Mate rials/Se rvice s/Supplie s 1,593,800 1,625,600 1,658,100 4 Interfund Services 4,429,400 4,558,400 4,712,800 5 Resource & Production 20,416,600 21,029,100 21,660,000 6 Capital Outlay 0 0 0 7 Total 31,123,800$ 32,117,400$ 33,136,000$
Line No. Description
Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025
($) ($) ($)
1 Existing Short and Long-Term Loan 1,287,400 1,287,400 937,400 2 Proposed Short-Term and Rev Bonds 220,800 1,642,400 2,910,100 3 Total 1,508,200$ 2,929,800$ 3,847,500$
Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 49 Table 5-9 Capital Improvement Projects

5.6.1 Capital Improvement Financing Plan
The City funds annual expenditures for the CIP from a combination of available funds on hand, outlet charges, conveyance fees, debt financing, connection charges, developer contributions, and revenues derived from user rates. As shown in Table 5-10, the average annual CIP expenditure is $20.5M for the Sewer Utility. The planned average annual CIP contribution from the Sewer Utility Operating Fund is $14.0M per year over the Study period. Due to the large costs associated with the RWF, the City plans to issue short-term loans of $0.4M in FY 2023 and $15.0M in FY 2024. The City expects to refinance the short-term loans with long-term revenues bonds in FY 2024 and FY 2025 based on updated financials and their financial advisor's advice.

Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
($) ($) ($)
1907 Devel opment Extensi ons 0 0 0 1 1908 SJ-SC Re gional Waste wate r Facility 13,815,500 14 ,968,200 24,184,200 2 1911 Sanitary Sewer System Condition
A ssessment 1,500,000 500 ,000 500,000
3 1912 Sani tary Sewer System Improvements 2,000,000 2, 000,000 2,000,000 4 1919 Sanitary Sewer Hydraulic Modeling As
Needed Support 1,140,000 0 0
5 1920 Sanitary Sewer Master Plan Update 500,000 0 0 6 1979 Engi neeri ng Management Servi ces
Sewer 828,900 1,0 18,900 1,050,700
7 Total 19,784,400$ 18,487,100$ 27,734,900$
Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

50 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 5-10 Construction Fund Financing Plan

5.7 TRANSFERS
The Sewer Utility will perform transfers over the Study period from the Operating Fund and other funds. The other funds consist of the Rate Stabilization Fund, Pension Stabilization Fund, and Construction Fund. See Section 5.8 for further explanation on Rate Stabilization and Pension Stabilization Funds. The Construction Fund transfers represent money to cover planned CIP project expenditures. All these transfers do not represent direct operating expenses for the enterprise.

Therefore Black & Veatch includes these costs as “below-the-line” cash flow items and not included as O&M expenses. Table 5-11, Lines 19 to 21 for the Sewer Utility reflect these associated amounts.

5.8 RESERVES
A utility typically establishes reserves for several reasons, such as covering shortfalls in operating revenues, maintaining strong bond ratings, covering day-to-day operating costs, and easing the burden on ratepayers associated with large rate increases. Per the reserve policy, the Sewer Utility will maintain the following four reserves:
 Operating Reserve represents working capital maintained by the Operating Fund to cover day- to-day expenses and maintain enough funds to cover accounts receivables if there are supplier issues, periods of lower-than-expected sewer revenues, or unforeseen cost increases. The reserve will maintain a minimum balance of 90 days of operating expenses once fully funded  Construction Reserve represents funds used for unforeseen and unbudgeted capital costs. Once fully funded, this reserve will maintain a minimum balance of 12-months of the following year’s planned City CIP and 6-months of the following year’s planned RWF CIP.  Rate Stabilization Reserve represents funds used to absorb revenue shortfalls due to short-term decreases in sewer sales. This reserve is designed to stabilize sewer rate revenue and avoid wide Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
Source of Funds
1 Sanitary Outlet Charge 0 0 0 2 Sewer Conveyance Fee 3,500,000 3,500,000 3,500,000 3 Intra Transfer In - Debt Financing 411,784 15,000,000 0 4 Intra Transfer In - Customer Service Charge 14,000,000 14,000,000 14,000,000 5 Refund from San Jose/Cupertino 0 0 0 6 Total Sources 17,911,784$ 32,500,000$ 17,500,000$
Use of Funds
7 Improvements Projects 5,968,900 3,518,900 3,550,700 8 Total Uses 5,968,900$ 3,518,900$ 3,550,700$
9 Net Annual Cash Balance 11,942,884 28,981,100 13,949,300 10 Beginning Unrestricted Fund Balance 10,549,116 8,676,500 22,689,400 11 Net Cumulative Fund Balance 22,492,000$ 37,657,600$ 36,638,700$ 12 Minimum Construction Reserves 11,003,000$ 15,642,800$ 11,814,500$ Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 51 swings in rates charged to customers over time. The reserve will maintain a minimum balance of 10% of sewer rate revenue when fully funded.
 Pension Stabilization Reserve represents funds used to pay for the unfunded pension liabilities and the increase in the City’s share of pension costs due to factors such as higher CalPERS rates and negotiated pay increases. The reserve target is $1.2M for the Sewer Utility by FY 2030.

Appropriate reserve levels help the Sewer Utility maintain liquidity and demonstrate to the rating agencies that the City’s financial policies and practices are focused on maintaining a balanced financial position.

5.9 PROJECTED OPERATING RESULTS
The revenue requirements of the Sewer Utility consist of O&M expenses, debt service, capital expenditures, and reserve requirements.

It is important to examine the cash flow projections under the status quo scenario to fully understand the current condition of the Sewer Utility and the need for revenue adjustments. As shown in Figure 5-1, the status quo conditions would project that the Sewer Utility would operate from an annual deficit position, thus tapping into its reserves. In this scenario, the Sewer Utility would not impose any revenue increases over the Study Period and continue to incur O&M expenses, pay for the execution of the planned CIP, and transfer to reserves.

Figure 5-1 Status Quo Operating Cash Flow

The Sewer Utility will fall into a deficit position if the City does not implement the revenue increases, as shown in Table 5-10. The revenue increases represent the overall total revenue adjustment needed to meet revenue requirements. The revenue adjustment does not represent adjustments to the individual rates but reflects the overall level of revenue needed to meet the Sewer Utility’s obligations.

The suggested revenue increases help the Sewer Utility meet the following goals:
 Meet budgeted operating obligations in the three FYs.  Meet planned capital investments in the three FYs.
$60 ,000,000
$50 ,000,000
$40 ,000,000
$30 ,000,000
$20 ,000,000
$10 ,000,000
$0
- O&M
- Revenue
Sewer Utility - Operating Fund
--
2023
- Debt Service
- cas h Ba lance
2024
- Capital Projects
....,. Target Cash Balance
2025
- Rate Stabilization
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

52 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022  Maintain an operating reserve of 90 days of operating expenses.  Maintain construction reserve of 12-months of next year’s CIP for City projects and 6-months of next year’s CIP for the RWF.
 Continue to fund the rate stabilization reserve to reach its goal of 10% of rate revenues.  Continue transfers for the pension stabilization reserve to meet the FY 2030 goal.

Shown in Table 5-11 is a summary of the proposed Operating Fund for the Study Period. The Operating Fund consists of 1) Revenue and 2) Revenue Requirements.

Revenue
 Line 1 is the revenue under existing rates.
 Lines 2 through 4 are the additional revenue generated from the required annual revenue increases. The additional revenue generated is a direct reflection of the number of months the increase is effective for, and therefore amount might calculate at less than that stated amount.  Line 6 is the total revenue generated from user charges.  Line 12 represents other operating revenues.
 Line 13 represents total revenues for the enterprises.

Revenue Requirements
 Line 15 represents O&M expenses. The O&M expenses include RWF costs.  Line 18 represents debt service payments.
 Line 22 represents transfers. The transfers include money to the Rate Stabilization Fund, Other Fund, Pension Fund, and Construction Fund.
 Line 23 represents total revenue requirements.

Line 26 represents the net cumulative cash balance within the Operating Funds. The net cumulative cash balance intends to match, to the extent possible, Line 27. The cash balance reserve is required to ensure the Operation Fund can continue in the event of a supplier interruption, market price fluctuations of critical equipment or supplies or an abrupt drop in account receivables. The reserve target minimum is 90 days of O&M expenses. Line 28 represents the debt service coverage. Currently, the City does not have debt coverage requirements for the short-term loans, but the operating cash flow is set up to achieve a debt service coverage of 1.25x requirement is met in all years. The requirement will come into effect when long-term debt is used to refinance the short-term loans. The lending financial institution sets the debt service coverage ratio via a rate covenant that will also obligate the City to increase revenues as needed to meet the minimum debt service coverage requirement City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Revenue and Revenue Requirements 53 Table 5-11 Operating Fund

Fiscal Year Ending June 30,
FY 2023 FY 2 024 FY 2025
Revenue
Rate Revenue
1 Revenue from Exi sti ng Rates 40,607,500 40,710,600 40,813,600 Year
Months
Effective Rate Adj
2 2023 12 3.00% 1,218,200 1 ,221,300 1,224,400 3 2024 12 3.50% 1,467,600 1,471,300
4 2025 12 3.50% 1,522,800
5 Increased Revenue Due to Adjustments 1,218,200 2,688,900 4,218,500 6 Subtotal Rate Revenue 41,825,700$ 43,399,500$ 45,032,100$ Other Operating Revenue
7 System Administration (Interest Income) 622,300 633,800 645,600 8 System Maintenance 95,500 95,500 95,500 9 Operations 350,000 350,000 350,000
10 SJ SC Wate r Pollution Control Plant 0 0 0 11 Storm Pump Maintenance 0 0 0 12 Subtotal Other Operating Revenue 1,067,800$ 1,079,300$ 1,091,100$ 13 Total Revenue 42,893,500$ 44,478,800$ 46,123,200$
Revenue Requirements
Operating & Maintenance
14 O&M Expenses 31,123,800 32,117,400 33,136,000
15 Subtotal O&M 31,123,800$ 32,117,400$ 33,136,000$
Debt Servi ce
16 Existing Loans/Bonds 1,287,400 1,287,400 937,400 17 Proposed Loans/Bonds 220,800 1,642,400 2,910,100 18 Total Debt Servi ce 1,508,200$ 2,929,800$ 3,847,500$ Transfers
19 Transfer to Rate Stabilization Fund 250,000 500,000 750,000 20 Transfer to Pension Stabilization Fund 78,200 78,200 78,200 21 Transfer to Sewer Construction Fund 14,000,000 14,000,000 14,000,000 22 Total Transfers 14,328,200$ 14,578,200$ 14,828,200$ 23 Total Revenue Requirements 46,960,200$ 49,625,400$ 51,811,700$ 24 Net Annual Cash Balance (4,066,700) (5,146,600) (5,688,500) 25 Beginning Fund Balance 28,382,500 24,315,800 19,169,200 26 Net Cumulative Fund Balance 24,315,800$ 19,169,200$ 13,480,700$ 27 Mi ni mum Operati ng Reserves (90 Days) 7,674,400$ 7,919,400$ 8,170,500$ 28 Debt Servi ce Coverage (Mi n 1.25) 7.80 4.22 3.38 Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

54 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Figure 5-2 presents the proposed Operating Fund.

Figure 5-2 Operating Cash Flow

$60 ,000,000
$50 ,000,000
$40 ,000,000
$30 ,000,000
$20 ,000,000
$10 ,000,000
$0
- O&M
- Revenue
Sewer Utility - Operating Fund
-- --
2023 2024 2025
- Debt Service - Capital Projects - Rate Stabilization
- cas h Ba lance -. Target Cash Balance
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 55 6 Cost of Service Analysis
The cost-of-service analysis requires that the utility recover needed revenues from rates for sewer service, which are allocated to customer classes according to the service rendered. An equitable rate structure allocates the capture of revenue requirements to customer classes based on contributed sewage volume, strengths, number of customer connections, and other relevant factors.

In analyzing the Sewer Utility’s cost of service for allocation to its customer classes, Black & Veatch selected the annual revenue requirements for FY 2023 as the Test Year requirements to demonstrate the development of cost-of-service sewer rates. Table 6-1 summarizes the total costs of service that need to be recovered from sewer user rates. The table represents TY 2023.

Table 6-1 Cost of Service Revenue from Rates

To derive the net revenue requirement recovered through rates, it is necessary to deduct revenues from other sources as shown in Line 10 which corresponds with Table 5-11, Line 12. Shown in Line 4 is the total revenue requirement that corresponds with Table 5-11, Line 23. Line 11 represents the net annual cash balance during the TY. If the enterprise is drawing down funds already in the Operating Fund, this number is positive. The number will be negative if the enterprise is replacing funds. In the case of the Sewer Utility, the $4.1M figure indicates that the forecast is projecting a negative cash balance for the year.

6.1 FUNCTIONAL COST COMPONENTS
The first step in conducting a cost-of-service analysis involves analyzing the cost of providing sewer service by system function to properly allocate the costs to the various customer classes and, Operating Capital Tota l
Expense Cost Cost
($) ($) ($)
Revenue Requi rements
1 O&M Expense 31,123,800 0 31,123,800 2 Debt Servi ce Requi rements 0 1,508,200 1,508,200 3 Transfers 328,200 14,000,000 14,328,200
4 Subtotal 31,452,000$ 15,508,200$ 46,960,200$
Less Revenue Requi rements Met from Other Sources
5 System Administration 622,300 0 622,300 6 System Maintenance 95,500 0 95,500 7 Operations 350,000 0 350,000 8 SJ SC Wate r Pollution Control Plant 0 0 0 9 Storm Pump Maintenance 0 0 0 10 Subtotal 1,067,800$ 0$ 1,067,800$ Adjustments
11 Adjustment for Annual Cash Balance 4,066,700 0 4,066,700 12 Subtotal 4,066,700$ 0$ 4,066,700$ 13 Cost of Servi ce to be Recovered from Rates 26,317,500$ 15,508,200$ 41,825,700$ Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

56 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 subsequently, design rates. As a basis for allocating costs of service among customer classes, costs are separated into the following four basic functional cost components: (1) Base; (2) Strength; (3) Customer; and (4) Direct Assignment, described as follows:
 Base costs represent operating and capital costs of the system associated with collection. The collection costs vary directly with the quantity of sewage flow.  Strength costs represent those operating and capital costs associated with treatment. The treatment costs are specifically related to strength parameters such as Biological Oxygen Demand, Total Suspended Solids, and Ammonia.
 Customer costs are those expenditures that tend to vary in proportion to the number of customers connected to the system. These include meter reading, billing, collecting, accounting, maintenance, and capital costs associated with meters and services.  Directly assigned costs are specifically identified as those incurred to serve specific customers.

The Sewer Utility has no directly assigned categories.

6.2 ALLOCATION TO COST COMPONENTS
The next step of the cost-of-service process involves allocating each cost element to functional cost components based on the parameter or parameters having the most significant influence on the magnitude of that element of cost. O&M expense items are allocated directly to appropriate cost components. A detailed allocation of related capital investment is used as a proxy for allocating capital and replacement costs. The separation of costs into functional components provides a means for distributing such costs to the various classes of customers based on their respective responsibilities for each type of service.

6.2.1 Volume and Strength Allocations
The sewer system consists of various facilities designed and operated to fulfill a given function.

For the system to provide adequate service to its customers, it must be capable of meeting not only the annual volume requirements but also the strength loading demands placed on the system. Because not all customers and types of customers exert volume and strength loading demands similarly, the capacities of the various facilities must be designed to accommodate the demands of all classes of customers. Each sewer service facility within the system has an underlying volume demand exerted by all customers for whom the base cost component applies. For those facilities designed solely to meet volume demand, 100% of the costs go to the base cost component. For facilities designed to meet strength loading demands, the percentage of the costs is allocated to the different strength cost components based on their specific function.

6.2.2 Allocation of Operating and Maintenance Expenses
The Sewer Utility books operating costs by functional categories. Therefore, Black & Veatch used the factors noted in Section 5.1 to allocate the operating expenses to the cost components. In allocating O&M expenses for TY 2023, the costs are directly allocated to the cost components to the extent possible. The allocation of Administration and Transfer cost elements is based on the average of all other costs. Table 6-2 represents the allocation of O&M to the cost components. Revenues are subtracted from other sources as shown in Table 6-1, Lines 10, and any drawdown of the cash balance is City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 57 deducted and normalized for partial rate adjustments as shown in Line 13 to determine the net O&M costs.

Table 6-2 Allocation of O&M Expenditures

6.2.3 Allocation of Capital Investments
In allocating the capital investment for TY 2023, the existing fixed assets (which serve as a proxy for the current capital investments) are allocated directly to cost components to the extent possible.

Plan capital costs can be allocated using the distribution of total net system investment across the functional cost components. The allocation of costs in this manner provides a basis for annual investment in sewer system facilities. Table 6-3 shows the total allocation of existing system investment serving sewer customers for the TY 2023. The total net system investment of $39.4M shown on Line 7 represents the Test Year original cost less accumulated depreciation of the system in service. The total net system investment reflects the Sewer Utility’s fixed asset listing ending June 30, 2021. This value represents the original cost (book value) of the assets.

Table 6-3 Allocation of Capital Costs

Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
($) ($) ($) ($) ($) ($)
Operation & Maintenance
1 1511 System Administration 5,162,400 2,372,000 825,400 841,300 856,400 66,300 2 1512 System Maintenance 2,563,900 2,563,900 0 0 0 0 3 1514 Operations 1,462,700 1,462,700 0 0 0 0 4 1515 SJ SC Wate r Pollution Control Plant
5 Treatment 19,300,000 6,611,900 4,150,700 4,230,800 4,306,600 0 6 Custom e r Billing & Me te r Re ading 333,400 0 0 0 0 333,400 7 A ll Othe r 1,111,200 1,111,200 0 0 0 0 8 1516 Storm Pump Maintenance 179,200 179,200 0 0 0 0 9 Transfers 328,200 150,800 52,500 53,500 54,400 4,200 10 Total O&M Expenses 30,441,000$ 14,451,700$ 5,028,600$ 5,125,600$ 5,217,400$ 403,900$ Less Other Revenue
11 Mi scel l aneous Revenues 1,067,800 490,700 170,700 174,000 177,100 13,700 12 Other Adjustments 4,066,700 1,868,600 650,200 662,700 674,600 52,200 13 Net Operati ng Expenses 25,306,500$ 12,092,400$ 4,207,700$ 4,288,900$ 4,365,700$ 338,000$ Line Total Com mon to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
($) ($) ($) ($) ($) ($)
Plant Assets
1 Colle ction 34,069,400 34,069,400 0 0 0 0 2 Lift Station 5,294,900 5,294,900 0 0 0 0 3 General Pl ant 14,900 14,900 0 0 0 0 4 Total Plant Assets 39,379,200$ 39,379,200$ 0$ 0$ 0$ 0$ Less Other Revenue
5 Mi scel l aneous Revenues 0 0 0 0 0 0 6 Other Adjustments 0 0 0 0 0 0 7 Net Operati ng Expenses 39,379,200$ 39,379,200$ 0$ 0$ 0$ 0$ Updated 2022 Water and Sewer Rate Study | City of Santa Clara

58 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

6.3 UNITS OF SERVICE
To properly recognize the cost of service, each customer class receives its share of base, strength, and customer costs. Following the allocation of costs, the total cost responsibility for each customer class is developed using unit costs of service for each cost function and subsequently assigning those costs to the customer classes based on the respective service requirements of each. The number of units of service required by each customer class provides a means for the proportionate distribution of costs previously allocated to respective cost categories.

Table 6-4 summarizes the estimated Test Year units of service for the various customer classes.

Base costs vary with the volume of sewage flow produced and distributed to customer classes on that basis. Black & Veatch derived sewage flow information from the monthly water consumption records in the City’s CIS multiplied by a return factor. Strength costs are those associated with pollutant characteristics, and the Study allocated these costs to customer classes based on loadings. The pollutant loadings for each customer class come from recommendations of the State Water Resources Control Board, Revenue Program Guidelines, Appendix G, and the City of San Jose. The City’s commercial and industrial class consists of 17 distinct types of businesses such as retail, offices, restaurants, and hospitals. Since sampling is not an immediate possibility, the City has relied on industry standards used by the State of California. The number of bills for each customer class serves as the basis for distributing customer billing requirements.

6.4 COST OF SERVICE ALLOCATIONS
Unit costs of service are applied to each customer class’ respective service requirements to determine the cost of service for each customer class. The total unit costs of service applied to the respective requirements for each customer class results in the total cost of service for each customer class.

6.4.1 Units Costs of Service
The TY 2023 unit cost of service for each functional cost component is simply the total cost divided by the applicable units of service, as shown in Table 6-5. The capital costs on Line 3 and 4 are associated with City projects and RWF projects. These costs have been separated to determine the collection and treatment costs independently. On Line 5, the total costs represent the cost that rates need to recover, as demonstrated in Table 6-1, Line 14. The net O&M cost includes O&M (including the RWF) less revenue from other sources and adjustments. The total capital cost includes debt service payments and transfers to the Construction Fund. Line 6 represents the unit costs for the entire sewer system regardless of customer classes. After that, these unit costs are applied in allocating the costs to the specific customer classes.

6.4.2 Distribution of Costs of Service to Customer Classes Applying the unit costs to the units for each customer class produces the customer class costs.

This process is illustrated in Table 6-6, in which the study applies the unit costs to the customer class units of service. The costs attributable to each customer class are based on the functional cost components described in Section 6.1. Each customer class places a burden on the system in different ways, and thus the allocation of the units is representative of this burden.

City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Cost of Service Analysis 59 An example of the application of unit costs is shown below for illustrative purposes.

Vol Component
Uni t Cost (Tabl e 6-5, Li ne 7) 4.38$ per HCF General Customer Consumption (Table 6-6, Line 5) 67,228 HCF Total Allocated Cost 294,400$
Please note that the numbers within the tables are rounded, yet the calculations are done based on non-rounded values; therefore, results might vary.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara 60 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 6-4 Units of Service

Line Contributed Contributed BOD Loadings TSS Loadings NH3 Loadings No. Description Units Volume Factor Loading Factor Loading Factor Loading Bills Units of Measure (EDUs/M Bills) (HCF) (mg/L) (lbs) (mg/L) (lbs) (mg/L) (lbs) (bills) 1 Single Fam ily 260,421 1,419,298 250 2,213,700 250 2,213,700 35 309,900 248,197 2 Multi-Fam ily 303,045 1,632,217 250 2,545,700 250 2,545,700 35 356,400 27,674 3 Amusement Parks 122 67,228 130 54,500 80 33,600 11 4,600 295 4 Auto Deal ers & Servi ce Stati on 376 22,013 180 24,700 280 38,500 11 1,500 730 5 Churches 243 17,778 130 14,400 80 8,900 11 1,200 605 6 Com/Ind/Misc 9,929 1,293,400 130 1,049,000 80 645,500 11 88,800 21,302 7 Electric & Electronic Equip. 392 496,422 30 92,900 15 46,500 15 46,500 1,596 8 Food and Kindred Products 23 19,040 1,120 133,000 690 82,000 0 0 166 9 Hospi tal s & Conval escent Homes 309 94,511 230 135,600 85 50,100 15 8,800 799 10 Industrial Chemical 52 13,903 360 31,200 720 62,500 0 0 113 11 Laundries 117 25,892 150 24,200 110 17,800 5 800 352 12 Machinery Manufacturers 681 39,414 290 71,300 550 135,200 0 0 1,703 13 Me tal Plating 94 7,009 10 400 60 2,600 1 0 201 14 Motel s & Hotel s 42 116,133 310 224,600 121 87,700 7 5,100 52 8 15 Paper 13 149,741 1,250 1,167,700 560 523,100 10 9,300 51 16 Repair Shops & Car Washes 478 12,231 180 13,700 280 21,400 0 0 695 17 Restaurants 245 80,611 1,250 628,600 560 281,600 10 5,000 2,121 18 Schools & Colleges 512 43,584 130 35,300 100 27,200 30 8,200 1,072 19 Major Users - Customer 1 0 0 0 0 0 20 Total 5,550,425 8,460,500 6,823,600 846,100 308,200 City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 61
Table 6-5 Units Cost of Service

Table 6-6 Distribution of Costs to Customer Classes

Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Net Operati ng Expense 26,317,500 12,092,400 4,207,700 4,288,900 4,365,700 338,000 2 Debt Servi ce 1,287,400 1,287,400 0 0 0 0 3 Capital Costs (City) 4,223,800 4,223,800 0 0 0 0 4 Capital Costs (SJSC) 9,776,200 6,706,500 1,712,200 952,600 404,900 0 5 Total Cost of Service 41,604,900$ 24,310,100$ 5,919,900$ 5,241,500$ 4,770,600$ 338,000$ 6 Uni ts of Servi ce 5,550,425 8,460,500 6,823,600 846,100 308,200 HCF lbs lbs lbs bills
7 Cost per Unit 4.38$ 0.70$ 0.77$ 5.64$ 1.10$ per HCF per lbs per lbs per lbs per bill
Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Cost per Unit 4.38$ 0.70$ 0.77$ 5.64$ 1.10$ per HCF per lbs per lbs per lbs per bill
Single Fam ily
2 Units 1,419,298 2,213,700 2,213,700 309,900 248,197 3 Allocation of costs of service 12,021,000 6,255,100 1,559,100 1,707,400 1,750,800 272,000 Multi-Fam ily
4 Units 1,632,217 2,545,700 2,545,700 356,400 27,674 5 Allocation of costs of service 13,541,600 7,193,400 1,792,900 1,963,500 2,013,300 30,300 Amusement Parks
6 Units 67,228 54,500 33,600 4,600 295 7 Allocation of costs of service 386,900 296,300 38,400 25,900 26,000 300 Auto Deal ers & Servi ce Stati on
8 Units 22,013 24,700 38,500 1,500 730 9 Allocation of costs of service 153,400 97,000 17,400 29,700 8,500 800 Churches
10 Units 17,778 14,400 8,900 1,200 605 11 Allocation of costs of service 102,900 78,400 10,100 6,900 6,800 700 Com/Ind/Misc
12 Units 1,293,400 1,049,000 645,500 88,800 21,302 13 Allocation of costs of service 7,461,900 5,700,200 738,800 497,900 501,600 23,400 Electric & Electronic Equip.
14 Units 496,422 92,900 46,500 46,500 1,596 15 Allocation of costs of service 2,553,600 2,187,800 65,400 35,900 262,700 1,800 Food and Kindred Products
16 Units 19,040 133,000 82,000 0 166 17 Allocation of costs of service 241,000 83,900 93,700 63,200 0 200 Hospi tal s & Conval escent Homes
18 Units 94,511 135,600 50,100 8,800 799 19 Allocation of costs of service 601,200 416,500 95,500 38,600 49,700 900 Industrial Chemical
20 Units 13,903 31,200 62,500 0 113 21 Allocation of costs of service 131,600 61,300 22,0 00 48,200 0 100 - i---- , ------
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

62 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

Line Total Com mon to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Cost per Unit 4.38$ 0.70$ 0.77$ 5.64$ 1.10$ per HCF per lbs per lbs per lbs per bill
Laundries
22 Units 25,892 24,200 17,800 800 352 23 Allocation of costs of service 149,700 114,100 17,000 13,700 4,500 400 Machinery Manufacturers
24 Units 39,414 71,300 135,200 0 1,703 25 Allocation of costs of service 330,100 173,700 50,200 104,300 0 1,900 Me tal Plating
26 Units 7,009 400 2,600 0 201 27 Allocation of costs of service 33,400 30,900 300 2,000 0 200 Motel s & Hotel s
28 Units 116,133 224,600 87,700 5,100 528 29 Allocation of costs of service 767,000 511,800 158,200 67,600 28,800 600 Repair Shops & Car Washes
30 Units 12,231 13,700 21,400 0 695 31 Allocation of costs of service 80,800 53,900 9,600 16,500 0 800 Restaurants
32 Units 80,611 628,600 281,600 5,000 2,121 33 Allocation of costs of service 1,045,700 355,300 442,700 217,200 28,200 2,300 Schools & Colleges
34 Units 43,584 35,300 27,200 8,200 1,072 35 Allocation of costs of service 285,500 192,100 24,900 21,000 46,300 1,200 36 TOTAL COSTS OF SERVICE 41,825,700$ 24,461,600$ 5,958,600$ 5,263,000$ 4,779,700$ 338,000$ City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 63
7 Rate Design
The initial consideration in the derivation of rate schedules for sewer service is establishing equitable charges to the customers commensurate with the cost of providing that service. While the cost-of-service allocations to customer classes should not be construed as literal or exact determinations, they offer a guide to the necessity for, and the extent of, rate adjustments. Practical considerations sometimes modify rate adjustments by considering additional factors such as the extent of bill impacts, existing contracts, and historical local policies and practices.

7.1 EXISTING RATES
The Sewer Utility’s existing rates consist of a fixed component in the form of a monthly service charge and a variable component in the form of a consumption charge. The monthly service charge is a flat fee based on EDUs and is applied to residential customers. The monthly service charge also is a minimum for non-residential customers and applies when the consumption charge is less than the monthly service charge. Non-residential customers also have a consumption charge based on units of water consumption (1 unit = 1 HCF = 748 gallons) multiplied by a return factor. The City has separate charges for major users consisting of O&M and capital components. Table 5-5, presented earlier in this report, summarizes the current sewer rates.

7.2 PROPOSED RATES
The costs of service analysis described in the preceding sections of this report provide a basis for designing sewer rates.

7.2.1 Monthly Service Charge
The monthly service charge is designed to recover residential costs associated with contributed sewage flow, strength loadings, billing, collecting, accounting, and maintenance and capital costs. The charge is a flat monthly fee based on EDUs. An EDU is defined in Section 5.1. In FY 2023, the multi-family rate was separated from single-family and became a stand-alone customer class. In FY 2022, the City obtained and verified EDU information for the multi-family customers, enabling a separation of the customer classes.

The monthly service charge also serves as the minimum monthly service charge for non- residential customers. The minimum service charge will recover non-residential costs associated with volume, strength, meter reading, billing, collecting, accounting, and maintenance and capital costs. The minimum monthly service charge incorporates an allowance for sewage flow. Once a customer exceeds the allowance, the minimum monthly service charge goes away.

Table 7-1 shows the forecasted proposed three-year monthly service charge rate schedule.

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

64 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Table 7-1 Proposed Monthly Service Charge

7.2.2 Consumption Charge
The consumption charges are designed to recover the remainder of the cost component costs not recovered through the monthly service charge for non-residential customers. Table 7-2 shows the forecasted proposed three-year rate schedule for the Sewer Utility.

Table 7-2 Proposed Consumption Charges

7.2.3 Major Users
The major commercial and industrial user charge is designed to recover the costs associated with O&M and capital for major users. Major users are classified based on requirements in Section 5.1.

These customers are monitored monthly for volume and strength loadings. Major users are charged the unit charges identified in Table 6-5, Line 7. Note that the major user charges are specifically identified O&M and capital components. Charges for all other customers incorporate these charges, but the City has combined them into a single rate for simplicity. Table 7-3 shows the three-year rate schedule based on unit costs in future years.

Line Proposed
No. C
ustomer Class FY 2023 FY 2024 FY 2025
Monthly Service Charge ($/EDU) $/month $/month $/month
1 Single Fam ily 46.82 48.50 50.28
2 Multi-Fam ily 44.69 46.32 48.05
Minimum Commercial Bill Charge ($/Month) $/month $/month $/month 3 A ll Custom e rs 46.82 48.50 50.28
Line Proposed
No. C
ustomer Class FY 2023 FY 2024 FY 2025
Commodity Charge ($/HCF) $/HCF $/HCF $/HCF
1 Amusement Parks 5.67 5.82 5.99
2 Auto Deal ers & Servi ce Stati on 6.17 6.37 6.57
3 Churches 5.15 5.28 5.42
4 Com/Ind/Misc 5.41 5.56 5.71
5 Electric & Electronic Equip. 5.11 5.22 5.33
6 Food and Kindred Products 12.60 13.28 13.93
7 Hospi tal s & Conval escent Homes 6.21 6.41 6.60
8 Industrial Chemical 9.29 9.69 10.08
9 Laundries 5.57 5.74 5.89
10 Machinery Manufacturers 7.57 7.87 8.17
11 Me tal Plating 4.14 4.20 4.29
12 Motel s & Hotel s 6.59 6.82 7.05
13 Paper 12.94 13.65 14.31
14 Repair Shops & Car Washes 4.77 4.95 5.10
15 Restaurants 12.83 13.54 14.20
16 Schools & Colleges 6.00 6.15 6.32
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Rate Design 65
Table 7-3 Proposed Major User Charges

7.3 TYPICAL MONTHLY COSTS UNDER PROPOSED CHARGES
Table 7-4 compares typical monthly costs under existing rates and the proposed schedule of sewer user rates derived in this study for residential and non-residential customers.

Table 7-4 Typical Monthly Bill

7.4 NEIGHBORING SEWER UTILITIES
All surveyed community rates are best estimates as of May 2022. Presented in Figure 7-1 is the proposed rates compared to rates of neighboring jurisdictions, for a single-family residential customer.

Based on the comparison, the City is currently a higher cost sewer provider in the area. With the proposed rate increases, the City remains one of the higher sewer providers of the surveyed communities.

Line Proposed
No. Customer Class FY 2023 FY 2024 FY 2025
Major Commercial and Industrial Users
Operating and Maintenance Cost Recovery
1 Vol ume (per MG) 2,993.84 3,000.08 3,068.71
2 BOD [2] (per 1,000 lbs) 497.33 497.47 508.29
3 SS [3] (per 1,000 lbs) 628.54 628.75 642.43
4 NH3 [4] (per 1,000 lbs) 5,159.79 5,161.10 5,274.31
Annual Capital Cost Recovery
5 Vol ume (per MGD) 1,087,371 1,124,455 1,140,228
6 BOD [2] (per 1,000 lbs/day) 75,537 97,560 113,092
7 SS [3] (per 1,000 lbs/day) 52,105 67,304 78,018
8 NH3 [4] (per 1,000 lbs/day) 178,596 230,700 267,439
Typical FY 2022 FY 2023
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Single Fam ily Re side ntial $44.53 $46.82
Multi-Fam ily Re side ntial $44.53 $44.69
Non-Residential 0 $44.53 $46.82
10 $62.09 $65.08
20 $124.19 $130.16
30 $186.28 $195.24
40 $248.37 $260.32
50 $310.46 $325.40
100 $620.93 $650.81
250 $1,552.32 $1,627.02
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

66 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022 Figure 7-1 Comparison to Neighboring Sewer Utilities

Santa
Clara
Current
Santa
Clara
Proposed
San Jose
Proposed
Sunnyvale
Proposed SJWC
Mountain
View
Proposed
Milpitas Palo Alto
Proposed
WATER RATE 12 HCF $80.28 $87.96 $104.43 $78.71 $157.52 $106.99 $110.41 $152.04 SEWER RATE $44.53 $46.82 $45.49 $55.52 $45.49 $50.10 $62.07 $44.62 COMBINED $124.81 $134.78 $149.92 $134.23 $203.01 $157.09 $172.48 $196.66 $0.00
$50.00
$100.00
$150.00
$200.00
$250.00
Monthly Bill
■
■
■
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Appendix A – Ten-Year Financial Plan

67 Appendix A – Ten-Year Financial Plan

Updated 2022 Water and Sewer Rate Study | City of Santa Clara

68 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

WATER UTILITY

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025 FY 2 026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Exi sti ng Rates 51,024,600 51,267,300 51,392,300 51,517,700 51,643,200 51,769,200 51,895,300 52,021,900 52,148,700 52,275,800 2 Increased Revenue Due to Adjustments 4,490,200 9,420,000 14,796,500 20,306,600 26,115,800 28,518,200 31,002,200 32,739,800 34,518,800 36,340,700 3 Subtotal Rate Revenue 55,514,800$ 60,687,300$ 66,188,800$ 71,824,300$ 77,759,000$ 80,287,400$ 82,897,500$ 84,761,700$ 86,667,500$ 88,616,500$ Other Operating Revenue
4 Solar System Maintenance 77,800 77,800 77 ,800 77,800 77,800 77,800 77,800 77,800 77,800 77,800 5 Water System Mai ntenance 43,600 43,600 43 ,600 43,600 43,600 43,600 43,600 43,600 43,600 43,600 6 Water Construction 0 0 0 0 0 0 0 0 0 0 7 Water System Operati ons 0 0 0 0 0 0 0 0 0 0 8 A dm inistration De sign 882,200 888,900 895,800 902,800 909,900 917,200 924,600 932,200 939,900 947,800 9 Water Quality 0 0 0 0 0 0 0 0 0 0 10 Water Resources 74,700 74,700 74,700 74,700 74,700 74,700 74,700 74,700 74,700 74,700 11 Subtotal Other Operating Revenue 1,078,300$ 1,085,000$ 1,091,900$ 1,098,900$ 1,106,000$ 1,113,300$ 1,120,700$ 1,128,300$ 1,136,000$ 1,143,900$ 12 Total Revenue 56,593,100$ 61,772,300$ 67,280,700$ 72,923,200$ 78,865,000$ 81,400,700$ 84,018,200$ 85,890,000$ 87,803,500$ 89,760,400$ Revenue Requirements
Operating & Maintenance
13 O&M Expenses 52,744,300 58,343,900 63,555,400 67,653,400 72,074,700 74,353,500 76,707,800 79,139,900 81,652,600 84,248,300 14 Subtotal O&M 52,744,300$ 58,343,900$ 63,555,400$ 67,653,400$ 72,074,700$ 74,353,500$ 76,707,800$ 79,139,900$ 81,652,600$ 84,248,300$ Debt Servi ce
15 Existing Loans/Bonds 0 0 0 0 0 0 0 0 0 0 16 Proposed Loans/Bonds 0 0 0 0 0 0 0 0 0 0 17 Total Debt Servi ce -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Transfers
18 Transfer to Rate Stabilization Fund 0 0 2,000,000 2,000,000 2,250,000 500,000 500,000 500,000 0 0 19 Transfer to Pensiotn Stabilization Fund 199,400 199,400 199,400 199,400 199,400 199,400 199,400 199,400 199,400 199,400 20 Transfer to Water Construction Fund 0 0 0 2,000,000 2,500,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 21 Total Transfers 199,400$ 199,400$ 2,199,400$ 4,199,400$ 4,949,400$ 5,699,400$ 5,699,400$ 5,699,400$ 5,199,400$ 5,199,400$ 22 Total Revenue Requirements 52,943,700$ 58,543,300$ 65,754,800$ 71,852,800$ 77,024,100$ 80,052,900$ 82,407,200$ 84,839,300$ 86,852,000$ 89,447,700$ 23 Net Annual Cash Balance 3,649,400 3,229,000 1,525,900 1,070,400 1,840,900 1,347,800 1,611,000 1,050,700 951,500 312,700 24 Beginning Fund Balance 7,336,200 10,985,600 14,214,600 15,740,500 16,810,900 18,651,800 19,999,600 21,610,600 22,661,300 23,612,800 25 Net Cumulative Fund Balance 10,985,600$ 14,214,600$ 15,740,500$ 16,810,900$ 18,651,800$ 19,999,600$ 21,610,600$ 22,661,300$ 23,612,800$ 23,925,500$ 26 Mi ni mum Operati ng Reserves (90 Days) 13,005,400$ 14,386,200$ 15,671,200$ 16,681,700$ 17,771,800$ 18,333,700$ 18,914,300$ 19,513,900$ 20,133,500$ 20,773,600$ Line No. Description
City of Santa Clara | UPDATED 2022 WATER AND SEWER Rate Study

BLACK & VEATCH CORPORATION | Appendix A – Ten-Year Financial Plan

69 RECYCLED WATER UTILITY

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Exi sti ng Rates 5,862,000 5,979,000 6,038,500 6,098,700 6,159,500 6,220,700 6,282,600 6,345,200 6,408,400 6,472,200 2 Increased Revenue Due to Adjustments 586,200 1,255,600 1,998,800 2,830,600 3,760,500 4,799,800 5,403,900 6,048,100 6,483,600 6,938,600 3 Subtotal Rate Revenue 6,448,200$ 7,234,600$ 8,037,300$ 8,929,300$ 9,920,000$ 11,020,500$ 11,686,500$ 12,393,300$ 12,892,000$ 13,410,800$ Other Operating Revenue
4 System Maintenance 92,000 93,800 95,700 97,600 99,600 101,600 103,600 105,700 107,800 110,000 5 South Bay Water Recycling System Maintena 413,700 413,700 413,700 413,700 413,700 413,700 413,700 413,700 413,700 413,700 6 Subtotal Other Operating Revenue 505,700$ 507,500$ 509,400$ 511,300$ 513,300$ 515,300$ 517,300$ 519,400$ 521,500$ 523,700$ Transfers From
7 RW Capital Fund 0 250,000 250,000 0 0 0 0 0 0 0 8 Subtotal Transfers From -$ 250,000$ 250,000$ -$ -$ -$ -$ -$ -$ -$ 9 Total Revenue 6,953,900$ 7,992,100$ 8,796,700$ 9,440,600$ 10,433,300$ 11,535,800$ 12,203,800$ 12,912,700$ 13,413,500$ 13,934,500$ Revenue Requirements
Operating & Maintenance
10 O&M Expenses 6,816,600 7,920,200 9,125,600 10,058,000 11,086,900 11,540,000 12,011,500 12,502,000 13,012,200 13,543,200 11 Subtotal O&M 6,816,600 7,920,200 9,125,600 10,058,000 11,086,900 11,540,000 12,011,500 12,502,000 13,012,200 13,543,200 Debt Servi ce
12 Existing Loans/Bonds 0 0 0 0 0 0 0 0 0 0 13 Proposed Loans/Bonds 0 0 0 0 0 0 0 0 0 0 14 Total Debt Servi ce 0 0 0 0 0 0 0 0 0 0 Transfers
15 Transfer to Rate Stabilization Fund 0 0 0 0 0 50,000 50,000 50,000 75,000 75,000 16 Transfer to Pensiotn Stabilization Fund 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 17 Transfer to Recycled Water Const Fund 0 0 0 50,000 50, 000 50,000 100,000 100,000 100,000 200,000 18 Total Transfers 9,800 9,800 9,800 59,800 59,800 109,800 159,800 159,800 184,800 284,800 19 Total Revenue Requirements 6,826,400$ 7,930,000$ 9,135,400$ 10,117,800$ 11,146,700$ 11,649,800$ 12,171,300$ 12,661,800$ 13,197,000$ 13,828,000$ 20 Net Annual Cash Balance 127,500 62,100 (338,700) (677,200) (713,400) (114,000) 32,500 250,900 216,500 106,500 21 Beginning Fund Balance 4,469,600 4,597,100 4,659,200 4,320,500 3,643,300 2,929,900 2,815,900 2,848,400 3,099,300 3,315,800 22 Net Cumulative Fund Balance 4,597,100$ 4,659,200$ 4,320,500$ 3,643,300$ 2,929,900$ 2,815,900$ 2,848,400$ 3,099,300$ 3,315,800$ 3,422,300$ 23 Mi ni mum Operati ng Reserves (90 Days) 1,680,800$ 1,952,900$ 2,250,100$ 2,480,100$ 2,733,800$ 2,845,500$ 2,961,700$ 3,082,700$ 3,208,500$ 3,339,400$ Line No. Description
Updated 2022 Water and Sewer Rate Study | City of Santa Clara

70 B&V PROJECT NO. 410918.0100 | JUNE 15, 2022

SEWER UTILITY

Fiscal Year Ending June 30,
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 Revenue
Rate Revenue
1 Revenue from Exi sti ng Rates 40,607,500 40,710,600 40,813,600 40,917,000 41,020,800 41,125,200 41,230,100 41,335,000 41,440,600 41,546,700 2 Increased Revenue Due to Adjustments 1,218,200 2,688,900 4,218,500 5,809,400 7,346,600 8,941,300 10,595,300 10,622,400 10,649,200 10,676,700 3 Subtotal Rate Revenue 41,825,700$ 43,399,500$ 45,032,100$ 46,726,400$ 48,367,400$ 50,066,500$ 51,825,400$ 51,957,400$ 52,089,800$ 52,223,400$ Other Operating Revenue
4 System Administration (Interest Income) 622,300 633,800 645,600 657,600 669,800 682,300 695,000 708,000 721,200 734,700 5 System Maintenance 95,500 95,500 95,500 95,500 95,500 95,500 95,500 95,500 95,500 95,500 6 Operations 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 7 SJ SC Wate r Pollution Control Plant 0 0 0 0 0 0 0 0 0 0 8 Storm Pump Maintenance 0 0 0 0 0 0 0 0 0 0 9 Subtotal Other Operating Revenue 1,067,800$ 1,079,300$ 1,091,100$ 1,103,100$ 1,115,300$ 1,127,800$ 1,140,500$ 1,153,500$ 1,166,700$ 1,180,200$ 10 Total Revenue 42,893,500$ 44,478,800$ 46,123,200$ 47,829,500$ 49,482,700$ 51,194,300$ 52,965,900$ 53,110,900$ 53,256,500$ 53,403,600$ Revenue Requirements
Operating & Maintenance
11 O&M Expenses 31,123,800 32,117,400 33,136,000 34,163,000 35,219,400 36,422,000 37,667,000 38,956,000 40,290,100 41,671,800 12 Subtotal O&M 31,123,800$ 32,117,400$ 33,136,000$ 34,163,000$ 35,219,400$ 36,422,000$ 37,667,000$ 38,956,000$ 40,290,100$ 41,671,800$ Debt Servi ce
13 Ex
isting Loans/Bonds 1,287,400 1,287,400 937,400 937,400 937,400 937,400 937,400 937,400 937,400 0 14 Proposed Loans/Bonds 220,800 1,642,400 2,910,100 3,379,500 3,379,500 3,379,500 3,379,500 3,379,500 3,379,500 3,379,500 15 Total Debt Servi ce 1,508,200$ 2,929,800$ 3,847,500$ 4,316,900$ 4,316,900$ 4,316,900$ 4,316,900$ 4,316,900$ 4,316,900$ 3,379,500$ Transfers
16 Transfer to Rate Stabilization Fund 250,000 500,000 750,000 1,250,000 1,250,000 200,000 100,000 0 0 0 17 Transfer to Pension Stabilization Fund 78,200 78,200 78,200 78,200 78,200 78,200 78,200 78,200 78,200 78,200 18 Transfer to Sewer Construction Fund 14,000,000 14,000,000 14,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 8,000,000 8,000,000 19 Total Transfers 14,328,200$ 14,578,200$ 14,828,200$ 11,328,200$ 11,328,200$ 10,278,200$ 10,178,200$ 10,078,200$ 8,078,200$ 8,078,200$ 20 Total Revenue Requirements 46,960,200$ 49,625,400$ 51,811,700$ 49,808,100$ 50,864,500$ 51,017,100$ 52,162,100$ 53,351,100$ 52,685,200$ 53,129,500$ 21 Net Annual Cash Balance (4,066,700) (5,146,600) (5,688,500) (1,978,600) (1,381,800) 177,200 803,800 (240,200) 571,300 274,100 22 Beginning Fund Balance 28,382,500 24,315,800 19,169,200 13,480,700 11,502,100 10,120,300 10,297,500 11,101,300 10,861,100 11,432,400 23 Net Cumulative Fund Balance 24,315,800$ 19,169,200$ 13,480,700$ 11,502,100$ 10,120,300$ 10,297,500$ 11,101,300$ 10,861,100$ 11,432,400$ 11,706,500$ 24 Mi ni mum Operati ng Reserves (90 Days) 7,674,400 7,919,400 8,170,500 8,423,800 8,684,200 8,980,800 9,287,800 9,605,600 9,934,500 10,275,200 25 Debt Servi ce Coverage (Mi n 1.25) 7.80 4.22 3.38 3.17 3.30 3. 42 3.54 3.28 3.00 3.47 Line No. Description
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-102 Agenda Date: 6/21/2022

REPORT TO COUNCIL

SUBJECT
Public Hearing: Action on the Adoption of the Proposed FY 2022/23 & FY 2023/24 Biennial Capital Improvement Program Budget and FY 2022/23 Operating Budget Changes and Approval of FY 2022/23 Municipal Fee Changes to Library Community Room Rental Fees

COUNCIL PILLAR
Enhance Community Engagement and Transparency

BACKGROUND
City Charter Section 1302 Budget - Submission to City Council requires that at least thirty-five days prior to the beginning of each fiscal year, or at such prior date thereto determined by the City Council, the City Manager shall submit to the City Council the proposed budget.

This budget continues the biennial budget process that alternates between an operating and capital budget. This year’s budget focuses on the capital infrastructure, supporting the facilities that serve our residents and community. Amendments to the FY 2022/23 Adopted Operating Budget are also included.

Study sessions were held on May 24, 2022 and June 7, 2022 to allow the City Council and public to review and provide input on the Proposed FY 2022/23 and FY 2023/24 Biennial Capital Improvement Program Budget, FY 2022/23 Operating Budget Adjustments, and adjustments to the library community room rental fees. The June 7, 2022 study session and Council report also included follow -up from the May 24, 2022 study session.

As required by California Government Code Section 65401, the FY 2022/23 & FY 2023/24 Biennial Capital Improvement Program Budget was reviewed and approved by the Planning Commission (Commission) for conformity with the City of Santa Clara 2010-2035 General Plan at their June 15, 2022 meeting.

DISCUSSION
City Charter Section 1303 Budget - Public Hearing, requires that the City Council shall hold a public hearing on the proposed budget, at which interested parties shall be given an opportunity to be heard. A Public Hearing is scheduled for the purpose of taking public input on Council adoption of the Proposed FY 2022/23 and FY 2023/24 Biennial Capital Improvement Program Budget and FY 2022/23 Operating Budget changes, the Housing Authority and Sports and Open Space Authority budgets, amendments to the Budget and Fiscal Policies, and amendments to the library community room fees.

A copy of the Proposed Budget is available for review in the City Clerk’s Office and on the City’s City of Santa Clara Printed on 6/17/2022Page 1 of 6
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22-102 Agenda Date: 6/21/2022
website at:
<https://www.santaclaraca.gov/home/showpublisheddocument/77216/637868407536970000>. The Proposed Budget is also included as Attachment 1 to this document.

In addition, the City is required to calculate the expenditure appropriation limit from tax proceeds to determine compliance with Propositions 4 (Gann Initiative) and 111 (Spending Limitation Act of 1990).

The City’s GANN Appropriations limit is included as a separate report for Council action. As stated in this companion report, the City’s Proposed Budget is in compliance with the GANN Appropriations Limit.

FY 2022/23 Total Budget
The annual budget serves as a financial plan and operational guide that reflects the policies, goals, and priorities of the City Council and community. The capital budget guides the City in the planning, scheduling, and budgeting of capital investments within the City.

With the recommended amendments to the Proposed Budget, the FY 2022/23 Budget totals $1.3 billion, which is above the FY 2021/22 Adopted Budget of $1.2 billion due primarily to growth in the Electric Utility within the Enterprise Funds as shown in the attached Table 1: City of Santa Clara Annual Budget.

Biennial Capital Budget and Five-Year Capital Improvement Program (CIP) With the recommended amendments to the Proposed Budget, the Biennial Capital Budget totals $588 million and the Five-Year Capital Improvement Program (CIP) totals $830 million.

A breakdown of the capital budget by theme is on the attached Table 2: Breakdown of the Capital Budget by Theme.

FY 2022/23 Adopted Operating Budget Amendments
The City Council approved the FY 2021/22 and 2022/23 Biennial Operating Budget in June 2021.

While this year’s budget is focused on the capital budget, budget amendments to the FY 2022/23 Adopted Operating Budget are necessary to reflect the updated revenue estimates and to account for updated labor and non-personnel costs in the General Fund and other funds.

Recommended Changes to the Proposed Budget
A number of changes are recommended to the Proposed Budget as itemized in Attachment 2, including the following:
· Capital Project Carryovers : The carryover of capital funds from FY 2021/22 to FY 2022/23 to complete capital projects totals $204.3 million.
· Operating Budget Carryovers: The carryover of operating funds from FY 2021/22 to FY 2022/23 to complete specific purchases totals $2.7 million.

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22-102 Agenda Date: 6/21/2022
Housing Authority Budget
The Housing Authority Fund expenditure budget totals $380,363 in FY 2022/23 as shown in the Proposed Budget. The budget allows the City of Santa Clara Housing Authority to continue to manage and monitor housing assets from the dissolution of the Redevelopment Agency. Additionally, funding will be used to support loan monitoring, administration and other programs and projects related to affordable housing.

Sports and Open Space Authority Budget
The Sports and Open Space Authority expenditure budget totals $5,420 in FY 2022/23 as shown in the Proposed Budget. The purpose of the Sports and Open Space Authority is to support the acquisition and preservation of open space within the City and the development of local sports.

FY 2022/23 Municipal Fee Schedule Change
On April 19, 2022, the City Council approved the FY 2022/23 Municipal Fee Schedule that will be effective July 1, 2022. At that time, the library community room rental fees had not yet been determined. These fees have been suspended since 2019 out of concern that there was not customer service alignment with the parks & recreation community room rental fees. Based on City Council feedback during the April 5, 2022 Study Session on the FY 2022/23 Municipal Fee Schedule and the new Parks & Recreation Cost Recovery Policy, revised parks and recreation community room rental fees were established for FY 2022/23. Subsequently, the Library Department met with the Board of Library Trustees (BOLT) on April 28, 2022 to discuss library community room rental fees taking into account the fees adopted for the parks and recreation community room rentals. BOLT approved the proposed library community room rental fees.

The Proposed Library community room rental fees are: $20 per meeting for non-profit or Santa Clara resident community events; $90 per hour for non-resident use; and staff charges of $30 per hour if groups require assistance throughout their reservation. The revised page from the Municipal Fee Schedule is included as Attachment 4 to this memorandum.

Budget and Fiscal Policies Revisions
The Budget and Fiscal Policies were initially added in the FY 2019/2020 and FY 2020/21 Biennial Operating Budget and formally adopted by the City Council. Revisions to the Utility Reserves section of the policies are recommended as outlined in Attachment 6. These changes primarily impact the Electric Utility Reserves to better align with system needs given the significant projected growth that is expected to nearly double the load of the utility.

June 7, 2022 Budget Study Session
The City Council and the public provided additional feedback at the June 7, 2022 study session. The City Council reiterated many of the points from the May 24, 2022 study session, including the desire to fund several items such as the El Camino Specific Plan, Transportation Demand Management, and the Precise Plan for Downtown (Civic Center Relocation Study). Funding alternatives have been included in this memorandum for these items; however, staff does not recommend additional funding commitments at this time given the significant General Fund shortfall projected to be addressed in City of Santa Clara Printed on 6/17/2022Page 3 of 6
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22-102 Agenda Date: 6/21/2022
the upcoming Biennial Operating Budget.

The City Council also continued to discuss the D.A.R.E. Program that is currently not staffed by the Police Department as well as the need for a bond measure to support unfunded capital needs and potential support for youth programs collaboration efforts. The public expressed support for the revitalization of Downtown and the relocation of City Hall, funding for the El Camino Specific Plan and a lawn bowl clubhouse replacement, and the need to address the City’s General Fund budget shortfall and unfunded infrastructure needs.

Additional detail on items raised discussed during the study session is provided below. · D.A.R.E Program - The School Services Unit within the Police Department is responsible for the Drug Abuse Resistance Education (D.A.R.E.) program as well as other programs serving the schools and is assigned three Police Officers. While the D.A.R.E. program was not reduced or eliminated by the City Council as part of the budget process, it is currently not staffed. The D.A.R.E. program was suspended during COVID. Because of recruitment and retention issues and other higher priority needs (e.g., patrol and mental health-related responses), the positions assigned to the D.A.R.E. program remain unfilled. In January 2022, the Police Department launched a six-month focused hiring initiative that has already resulted in eight new employees hired with twelve additional new hires pending, expected at the end of June. The Police Department currently has eight Police Officer vacancies and three Police Officers in training that are anticipated to be street ready by September 2022. The Police Department continues to dialogue with the School District regarding D.A.R.E. and the need for services. Plans are in place to conduct “Run, Hide, Fight” Active Shooter training in all SCUSD schools this upcoming year.
· Lawn Bowl Clubhouse - In June 2018, $175,000 was budgeted for the repair and maintenance of the lawn bowl clubhouse. These repairs have not yet been completed and there was a question regarding the cost of replacing the modular building. In December 2018, staff presented the estimated cost of replacing the existing structure ranging from $420,000 to $530,000, resulting in a funding gap at that time of $245,000 to $355,000. With recent escalation, the current approximate cost of a modular building is roughly estimated at $750,000, resulting in a funding gap of $575,000. If this request were to proceed, further refinement of the estimate would be necessary.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
With the recommended adjustments to the Proposed Budget detailed in Attachment 2, the Biennial Capital Budget totals $356 million in FY 2022/23 and $232 million in FY 2023/24 and the five-year Capital Improvement Program totals $830 million. The Operating Budget for FY 2022/23 is $1.2 billion (including Transfers, Contributions and Reserves).

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Because the City Council policy for the Budget Stabilization Reserve is set at 25%, an exception to this policy is recommended as part of the adoption of the budget. The Budget Stabilization Reserve is projected to drop to $40.4 million, or 15% of the General Fund, as part of this budget.

COORDINATION
This report has been coordinated with the City Attorney’s Office.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any report to Council may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] or at the public information desk at any City of Santa Clara public library.

ALTERNATIVES

1. Approve the Proposed FY 2022/23 and FY 2023/24 Biennial Capital Budget, including the recommended revisions detailed in Attachment 2 (Majority Affirmative Council Votes Required) ;

2. Approve the FY 2022/23 Operating Budget changes included in the recommended revisions detailed in Attachment 2 (Five Affirmative Council Votes Required) ;

3. Approve the Appropriation Schedule for capital funds totaling $355,855,666 in FY 2022/23 and $232,042,249 in FY 2023/24 and the FY 2022/23 Appropriation Schedule for operating funds totaling $1,177,765,064 as detailed in Attachment 3 (Majority Affirmative Council Votes Required) ;

4. Approve the Housing Authority FY 2022/23 expenditure budget of $380,363 as presented in the Operating Budget (Majority Affirmative Council Votes Required) ;

5. Approve the Sports and Open Space Authority FY 2022/23 expenditure budget of $5,420 as presented in the Operating Budget (Majority Affirmative Council Votes Required) ;

6. Adoption of a Resolution amending the library community room rental fees in FY 2022/23 Municipal Fee Schedule, including $20 per meeting for non-profit or Santa Clara resident community events; $90 per hour for non-resident use; and staff charges of $30 per hour if groups require assistance throughout their reservation as shown on Attachment 4 (Majority Affirmative Council Votes Required) ; and

7. Approve the revised Budget and Fiscal Policies as described in Attachment 6 (Majority Affirmative Council Votes Required) .

At the Budget Study Sessions, the City Council expressed interest in a number of funding needs.

The following alternatives would provide the City Council options to fund various items as part of the adoption of the FY 2022/23 and FY 2023/24 Capital Budget.

8. Add funding of $200,000 in the General Fund to support the Transportation Demand Management program offset by a reduction to the General Fund Land Sale Reserve (Five Affirmative Council Votes Required) .

9. Add funding of $1.0 million in the General Fund to support the El Camino Real Specific Plan, offset by a reduction to the General Fund Land Sale Reserve (Five Affirmative Council Votes Required) .

10. Add funding of $325,000 in the General Fund to support a precise plan for Downtown to study the potential move of City Hall to Downtown offset by a reduction to the City Council Initiatives City of Santa Clara Printed on 6/17/2022Page 5 of 6
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22-102 Agenda Date: 6/21/2022
carryover in the General Fund (Majority Affirmative Council Votes Required) .

11. Other actions as determined by the City Council; any General Fund actions would be offset by a reduction to the General Fund Land Sale Reserve (Five Affirmative Council Votes Required) .

RECOMMENDATION
That the City Council, and the City Council acting as the Governing Boards of the Housing Authority and the Sports and Open Space Authority take the following actions:

1. Approve the Proposed FY 2022/23 and FY 2023/24 Biennial Capital Budget, including the recommended revisions detailed in Attachment 2 (Majority Affirmative Council Votes Required) ;

2. Approve the FY 2022/23 Operating Budget changes included in the recommended revisions detailed in Attachment 2 (Five Affirmative Council Votes Required) ;

3. Approve the Appropriation Schedule for capital funds totaling $$355,855,666 in FY 2022/23 and $232,042,249 in FY 2023/24 and the FY 2022/23 Appropriation Schedule for operating funds totaling $$1,177,765,064 as detailed in Attachment 3 (Majority Affirmative Council Votes Required) ;

4. Approve the Housing Authority FY 2022/23 expenditure budget of $380,363 as presented in the Operating Budget (Majority Affirmative Council Votes Required) ;

5. Approve the Sports and Open Space Authority FY 2022/23 expenditure budget of $5,420 as presented in the Operating Budget (Majority Affirmative Council Votes Required) ;

7. Approve the revised Budget and Fiscal Policies as described in Attachment 6 (Majority Affirmative Council Votes Required) .

Reviewed by: Kenn Lee, Director of Finance
Approved by: Rajeev Batra, City Manager

ATTACHMENTS

1. FY 2022/23 & FY 2023/24 Proposed Biennial Capital Improvement Program Budget and FY 2022/23 Operating Budget Changes

2. Recommended Revisions to the FY 2022/23 & FY 2023/24 Proposed Biennial Capital Improvement Program Budget and FY 2022/23 Operating Budget Changes, including the carryover of FY 2021/22 funds to FY 2022/23

3. FY 2022/23 and FY 2023/24 Appropriation Schedules

4. FY 2022/23 Municipal Fee Schedule Change - Library Fees

5. Resolution amending the FY 2022/23 Municipal Fee Schedule for Library Fees

6. Revised Budget and Fiscal Policies

7. Table 1: City of Santa Clara Annual Budget

8. Table 2: Breakdown of the Capital Budget by Theme
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FY 2022/23 and FY 2023/24
Proposed Biennial
Capital Improvement
Program Budget
City of
Santa -~~~~a
LE.

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FY 2 022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TABLE OF CONTENTS

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Transmittal Letter ………………………………………………………...………………………....................…...… 7 City Profile………...…………………………………………………………………………………...…………………… 31 Budget and Fiscal Policies .…………………………………………………….…...…………………...……………… 49 Budget Summary ...……………………………………………………………...…………………………...…………… 83 Revenues by Fund...………………………………………………………………………………...……………… 85 Expenditures by Fund………………………………………………………………..……………...……………… 88 Transfer Schedule……………......……………………………………..……………....…………...……………… 91 CIP Budget by Theme……………………..………………………………………………………...……………… 94 CIP Budget by Fund …..…………………………………………………………………..…...…...……….....…. 95 CIP Unfunded List…………………….………………………………………………………...…...………......... 97 CIP Operating Impacts………………………..……………………………………………...…...………......….. 100 CIP Budget by Expenditure Category………………………………............................…...……….............. 101 Summary of Budgeted Positions ………….…………………...…..……………………………..…...……….......… 103 Debt Service ………….…………………...……………………………….…..…………………..…...……….....…… 107 Ten-Year General Fund Financial Forecast ……………………..…………………………....…...……….....…… 121 Statements of Sources and Uses of Funds……………………..…………………………....…...……..…...……… 147 General Fund ………………………………………………………………………..…………...…...……….......…...… 149 Special Revenue and Other Funds ……………………………………………...……………..…...……..…...……… 163 American Rescue Plan Act (ARPA) Fund……………………….…………………………..…...……..…...…… 170 Bridge Maintenance District #2 Fund………………………..…………………………..…...……..…...………… 171 Building Development Services Fund………………………..…………………………..…...……..…...………… 172 Building Special Programs and Training Fund……………………….…………………………..…...……..….. 173 City Affordable Housing Fund.…………………………..………………………………....…...……..…...……. 174 Community Facilities District No. 2019-1 (Lawrence Station) Fund……………………..…...……..…...…… 175 Convention Center Maintenance District Fund.…………………………………………...…...……..…...…… 176 Dev eloper Traffic Payments Fund..……………………………….................…………...…...……..…...…… 177 Downtown Parking Maintenance District Fund..……………………………...…………...…...……..…...…… 178 Endowment Care Fund……………..………………………………………………………..…...……..…...…… 179 Engineering Operating Grant Trust Fund…………………………………………………..…...……..…...…… 180 Expendable Trust Fund……………………………………………………………………...…...……..…...…… 181 Fire Operating Grant Trust Fund ……………………………….…………………………..…...……..…...…… 183 FY 2 022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TABLE OF CONTENTS

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Special Revenue and Other Funds ……………………………………………...……….……..…...……..…...…… Gas Tax Fund ………………………………………………………………………………..…...……..…………… 184 Housing and Urban Development Fund ……………………………………………………………..….....……… 185 Housing Authority Fund ………………………………………………………………………..…...………..……… 186 Housing Successor Agency Fund …………………………………………………………………..….....……… 187 Library Donations Trust Fund ……………………………………………………..…...…...……………………… 188 Library Operating Grant Trust Fund ……………………………………………..…...…...……………………… 189 Other City Departments Operating Grant Trust Fund ………………………..…...…...………………………… 190 Parks and Recreation Operating Grant Trust Fund ……………………………………..…...…...……………… 192 Perpetual Care Fund………………………………………………………………..…...…...……………………… 193 Police Operating Grant Trust Fund………………………………………………………..………………..…...… 194 Prefunded Plan Review Fund ……………………………………………………………………..……………….. 196 Public Donations Fund ……………………………………………………………………..………………..…...… 197 Public, Educational, and Governmental Fee Fund ……………………………………...………………..…...… 199 Road Maintenance and Rehabilitation (SB1) Fund ……………………………………..………………..…...… 200 Traffic Mitigation Fund ……………………………………………………………………...………………..…...… 201 Enterprise Funds…………………………………………...………………...………………..…...………… 203 Cemetery Fund.…………………………………………………………………...………………..…...…………… 209 Convention Center Enterprise Fund…………………………………………………….……...………………..… 210 Electric Operating Grant Trust Fund ……………………………………………………...……...……………… 211 Electric Utility Fund.………………………………………………………………...………………..…...………… 213 Sewer Utility Fund……………………...…………………………………………………………...……………… 215 Solid Waste Fund.……………………………………………………………...…………………...……………… 217 Water Recycling Fund……………………………………………………………………………...………………. 219 Water Utility Fund…………………………………………………………………………………...……………… 220 Internal Service Funds ………………………...…………………………………………………..……………………… 223 Communication Acquisitions Fund…...…………………………………………………………………...……… 227 Fleet Operations Fund….…………………………………………………………………………………………... 228 Information Technology Services Fund…..……………………………………………………………………...… 229 Public Works Capital Projects Management Fund……………………………………………………………… 230 Special Liability Insurance Fund……...…………………………………………………………………………… 231 Unemployment Insurance Fund.…………………………………………………………..………………………. 232 Vehicle Replacement Fund………………………………………………………………………………………… 233 Workers’ Compensation Fund……..………………………………………………………………………………. 234 Capital Improvement Program Funds ………………………...………………………………..……………..…...… 235 Cemetery Capital Fund.…………………………………………………………………….……………..…...…… 240 Convention Center Capital Fund…………….…………………………………………………..……………..….. 241

FY 2 022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TABLE OF CONTENTS

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Capital Improvement Program Funds ………………………...…………………………………………..…...…… Electric Utility Capital Fund…………….…………………………………………………..……………..…...…… 242 Fire Department Capital Fund………………...…………………………………………………………..…...…… 245 General Government Capital Fund………………………………………………………..……………..…...…… 247 Library Department Capital Fund………………...………………………………………....……………..…...… 249 Parks and Recreation Capital Fund.………………………………………………………..……………..…...… 250 Patrick Henry Driv e Infrastructure Improv ement Fund….................................................................... 253 Public Buildings Capital Fund..………………………….…………………………………..……………..…...… 254 Recycled Water Capital Fund………………………………………………………….…....……………..…...… 256 Related Santa Clara Developer Fund…………………………………………………….....……………..…...… 257 Sewer Utility Capital Fund …………………………………………………………………..……………..…...… 258 Solid Waste Capital Fund.…………………………………………………………………...……………..…...… 260 Storm Drain Capital Fund …………………………………………………………………...……………..…...… 261 Street Lighting Capital Fund..………………………………………………………………..……………..…...… 263 Streets and Highways Capital Fund………………………….……………………………..……………..…...… 264 Tasman East Infrastructure Improv ement Fund…................................................................................ 268 Water Utility Capital Fund……..……………………………………………………………..……………..…...… 269 Other Agency Funds………………………...………………………………..……………….………………………..… 271 Sports and Open Space Authority Fund…………………………………………………...…………………..… 274 Capital Improvement Program ……….……………………………………………………………………………….. 275 Administrative Facilities………..…………………………………….………………………………………..…… 277 Community Facilities. ……………..………………………………………………………………………………. 297 Convention Center…………………………………………………………………………………………………..… 315 Electric Utility………………………….…………………………………………………………………………….. 325 Other Community Projects ………………………….……..……………………………..………………………. 373 Parks and Trails………………………...……………………….………………………………..………………… 387 Sewer Utility………………. ……………………….………………………………………………..……………… 407 Solid Waste……………………………………………...……………………………………..…………………… 419 Storm Drain…….………………..……………………………………………………..……………………………… 425

FY 2 022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TABLE OF CONTENTS

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Capital Improvement Program ……….………………………………………………………………………………..

Technology and Equipment………………………………………………………………………………………… 441 Transportation………………………………………………………………………………………………………… 459 Water and Recycled Water Utilities………………………………………………………..……………………… 497 Appendices………………………………………………………………………………………………………………..… 511 Budget Amendments Overview…..……………………………………………………………………………..…… 511 Operating Budget Change Summary – Revenue ………………………..……..………..…………………..…… 512 Operating Budget Change Summary – Expenditures ………...……………………………………………..…… 514 Department Expenditures Change………………………………………………………….…………………..…… 516 FY 2022/23 Budget Amendments to Adopted Operating Budget……………………....…………………..…… 534 CSMFO Award……………….....................................................………....…………………..……………… 563 GFOA Award……………….....................................................………....…………………..……………… 564 Indices…………………………………………………………………………………………….………………………..… 567 CIP Project Index by Theme..………………………………………………………….………………………..… 567 CIP Project Index by Department……….…………………………………………….………………………..…… 573 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER April 29, 2022
Honorable Mayor, C
ity Council and Residents of Santa Clara,
I am pleased to present the Proposed Biennial Capital Budget for fiscal years (FY) 2022/23 and 2023/24 and Five- Year Capital Improvement Program (CIP) as well as proposed amendments to the FY 2022/23 Adopted Operating Budget. This continues the biennial budget process that alternates between an operating and capital budget. This year’s budget focuses on our capital infrastructure, supporting the facilities that serve our residents and community.

The Biennial Capital Budget totals $382.1 million and the Five - Year CIP totals $624.5 million, supporting infrastructure improvements throughout the City. Of this CIP amount, $508.8 million (81%) funds capital projects for the City’s utilities and there is sufficient funding in the associated utility funds to support these projects. The ot her projects total $115.7 million and fund improvements to the parks, trails, libraries, transportation system, storm system, convention center and other City facilities. There are significant funding gaps in these areas and unfunded projects identified in this budget total $571.6 million over the next five years. This funding gap does not fully represent all the unmet/deferred infrastructure needs throughout the City beyond the five-year CIP period. Long term funding strategies are needed to meet these infrastructure needs as the General Fund does not have sufficient funding to cover these capital costs. The General Fund Capital Projects Reserve was fully allocated in this Proposed CIP to address the most immediate needs.

While the focus of this budget is on capital improvements, there are recommended FY 2022/23 operating budget adjustments to update revenue estimates and account for updated labor and non-personnel costs in the General Fund and other funds.

The City of Santa Clara must be able to maintain critical services that address our community’s urgent priorities. To preserve services, the overall FY 2022/23 General Fund balancing strategy that primarily uses reserves to address the projected shortfall remains in place. Because the FY 2021/22 and FY 2022/23 Biennial Operating Budget used one -time balancing actions and reserves, additional budget balancing actions will be necessary in Budget Milestones:

April 29: Release of
Proposed
Budget
May 24: City Council S
tudy
Session on Proposed
Budget
June 7: City Council Stu
dy
Session on Proposed
Budget
June 21: Publi c Heari
ng and
Adoption of FY
2022/23 and FY
2023/24 Biennial
Capital Budget and
Amendments to the FY
2022/23 Operating
Budget
July 1: Star t of Fis
cal Year
2022/23
7 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER the upcoming FY 2023/24 and FY 2024/25 Biennial Operating Budget that will be adopted in June 2023.

Based on the latest Ten-Year General Fund Forecast, an ongoing shortfall of $19.6 million is projected and will be addressed in the next Biennial Operating Budget . A combination of cuts, service deferments, internal cost controls (e.g., hiring freeze and controls on overtime, as-needed staff, marketing, travel, technology, and vehicle purchases), additional local revenue, and continued use of reserves is again expected to be used. Work to identify new ongoing revenue sources is underway, including fiscal sustainability measures for consideration on the November 2022 ballot. These measures will be critical to better position the City moving forward and reduce the level of service disruptions that may be needed to address the budget deficit.

Following is an overview of the total Proposed FY 2022/23 budget, the biennial capital budget and CIP, and proposed changes to the FY 2022/23 operating budget.

TOTAL BUDGET OVERVIEW
The FY 2022/23 Proposed B
udget totals $1.12 billion. This budget figure includes adjustments for transfers, contributions and reserves to avoid double counting of the same funds (e.g. internal service funds are excluded).

The FY 2022/23 Proposed Budget is below the FY 2021/22 Adopted Budget of $1.22 billion primarily because the carryover of funds from FY 2021/22 to FY 2022/23 has not yet been factored into the budget. These carryover adjustments are expected to be brought forward later in the budget process and incorporated into the FY 2022/23 Adopted Budget.

Table 1 below summarizes the total budgets by fund group.

Table 1: City of Santa Clara Annual Budget
Fund Type
FY 2021/22
Adopted Budget
FY 2022/23
Proposed Budget
General Fund $ 286,025,931 $269,591,355
Special Revenue Funds 28,214,477 27,453,289
Enterprise Funds 670,250,848 815,864,620
Internal Service Funds 41,211,645 42,329,153
Debt/Other* 39,291,994 19,846,647
Less (Transfers, Contributions, and Reserves)* (178,378,596) (200,317,482) Subtotal Operating Budget $886,616,299 $974,767,582
Capital Funds $337,391,387 $151,522,312
Less (Transfers, Contributions, and Reserves)* (6,682,539) (1,454,000) Subtotal Capital Budget $330,708,848 $150,068,312
Total Budget $ 1,217,325,147 $1,124,835,894
* Adjusts for transfers, contributions and reserves to avoid double counting of the same funds (e.g., internal service funds are excluded).
8 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Guiding Framework
The capital projects
are aligned to the following Council Strategic Pillars that were adopted by the City Council.

Table 2: Proposed CIP by Strategic Pillar
Strategic Pillar Projects %
Promote and Enhance Economic, Housing, and Transportation Development $14.4 M 2.3% Deliver and Enhance High Quality Efficient Services and Infrastructure 592.3 M 94.9% Enhance Community Sports, Recreational and Arts Assets 9.0 M 1.4% Enhance Community Engagement and Transparency 0 M 0.0%
Ensure Compliance with Measure J and Manage Levi’s Stadium 0 M 0.0% Manage Strategically Our Workforce Capacity and Resources 1.4 M 0.2% Promote Sustainability and Environmental Protection 7.4 M 1.2% Total CIP Budget $624.5 M 100%
On February 8, 2022, the
City Council reviewed and adopted FY 2022/23 Budget Principles (found in the Budget and Fiscal Policies section). These Budget Principles provide a framework for budget review and development, ensuring fiscal stability by considering both the short and long-term impacts of any funding decisions.

CAPITAL BUDGET OVERVIEW
The CIP guides the Ci
ty in the planning, scheduling, and budgeting of capital investments within each of the twelve theme areas. The FY 2022/23 and 2023/24 Biennial Capital Budget and CIP is a carefully balanced budget that reflects the City Council priorities and continues strategic investments in the City’s infrastructure .

The Proposed Biennial Capital Budget totals $382.1 million and the five-year CIP totals $624.5 million.

Capital Project Overview by Theme
Table 3: Proposed CIP by Theme
Theme
2022/23
Budget
2023/24
Budget
Biennial
Budget
Five-Year
CIP
Administrative Facilities $1,320,000 $1,551,000 $2,871,000 $2,871,000 Community Facilities 1,431,000 0 1,431,000 1,431,000
Convention Center 0 0 0 550,000
Electric Utility 93,832,936 184,175,278 278,008,214 389,769,831 Other Community Projects 9,460,082 6,453,710 15,913,792 34,882,959 Parks and Trails 3,028,920 278,000 3,306,920 7,806,920
Sewer Utility 19,045,006 17,797,655 36,842,661 92,217,360 Solid Waste 743,000 765,000 1,508,000 3,944,000
Storm Drain 761,000 714,000 1,475,000 1,475,000
Technology and Equipment 861,536 1,302,374 2,163,910 4,944,718 Transportation 12,869,832 13,790,232 26,660,064 61,725,510 Water and Recycled Water Utilities 6,715,000 5,215,000 11,930,000 22,835,000 Total Capital Budget $150,068,312 $232,042,249 $382,110,561 $624,453,298 9 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Prioritizing Capital Projects
The capital projects
are prioritized within each theme based on a number of factors, including:
• condition assessments of the existing infrastructure
• infrastructure needs to address growth and capacity needs due to development • improvements to meet changing needs and address City goals, such as energy efficiency projects and pedestrian and bicycle improvements
• availability of funding, including dedicated sources and grants The capital infrastructure associated with the City’s utilities (electric, water, recycled water, sewer, and solid waste) is funded primarily through customer service charges, developer contributions, and debt financing. Improvements are programmed to maintain the current infrastructure as well as address future capacity needs. There are dedicated funding sources to address these needs.

Capital projects in the non-utility infrastructure areas (e.g., transportation, parks, community centers, libraries, city facilities, storm system, convention center) are prioritized based on the factors above within the available funding. The dedicated funding sources, such as Quimby Act and Parks Mitigation Fee Act revenues, Gas Tax revenues, and various grants and developer contributions, are programmed in accordance with the funding restrictions. The General Fund Capital Projects Reserve (CPR) is used to address capital projects needs where there is not a dedicated funding source.

In the Proposed CIP, the limited CPR provides funding of $9.9 million for capital projects, including $6.7 million for projects identified in this CIP and $3.2 million for projects previously approved for funding in the out years of the last CIP. These modest sources are sufficient to fund only some of the most critical needs; there remains $571.6 million of unfunded projects identified over the next five years.

The proposed uses of the limited CPR funds address
critical needs and health and safety issues (e.g.,
Stationary Standby Generators, Fire Personal
Protective Equipment Replacement, and Central Park
Library Concrete Sidewalk Replacement), allocate
minimal funding to maintain city assets (e.g., Repair- Modifications to City Buildings, and Repair Historic
Buildings), and meet various requirements (e.g., Urban
Runoff Pollution Prevention and Bridge Maintenance
Program) as shown in the table below. Given the
limited funding available, most of the projects are
funded for the first two years which represent the
Biennial Capital Budget period, with unfunded amounts in the out years that would have to be addressed in a future CIP as funding allows.
10 City of
Santa Clara
FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Table 4: FY 2022/23 – FY 2026/27 Five-Year Capital Improvement Program Proposed Use of the General Fund Capital Project Reserve Theme
FY
2022/23
FY
2023/24
FY
2024/25
FY
2025/26
FY
2026/27
5-Year
Total
Administrative Facilities
Morse Mansion Maintenance &Repair $50,000 $50,000 $100,000 Repair to Historic Buildings 100,000 100,000 200,000
Repairs-Modifications to City Buildings 150,000 175,000 325,000 Replacement Self-Contained Breathing
Apparatus (SCBA) Filling Stations
100,000 100,000
Stationary Standby Generators 920,000 1,191,000 2,111,000 Triton Museum Repair & Modifications 35,000 35,000
Administrative Facilities Total $1,320,000 $1,551,000 $0 $0 $0 $2,871,000 Community Facilities
Central Park Library Concrete Sidewalk
Replacement
$273,000 $273,000
Community Facilities Total $273,000 $0 $0 $0 $0 $273,000 Storm Drain
Storm Drain Pump Station (SDPS)
Facility Maintenance & Repair
$113,000 $71,000 $184,000
SDPS Motor & Control Maintenance,
Repair & Replace
148,000 408,000 556,000
Storm Drain Slide Gate Rehabilitation 500,000 500,000
Urban Runoff Pollution Prevention Pgm 300,000 300,000
Storm Drain Total $761,000 $779,000 $0 $0 $0 $1,540,000 Technology and Equipment
Defibrillator Replacement Project $70,000 $70,000 $140,000 Financial & Human Resources Mgmt.

System (FHRMS) Update Project
39,283 39,283 39,283 117,849
Personal Protective Equipment
Replacement
416,536 357,374 234,374 1,008,284
Utility Mgmt. Information Systems
(UMIS) Enhancements
1,000 1,000 1,000 1,000 4,000
Technology and Equipment Total $525,819 $467,657 $274,657 $1,000 $1,000 $1,270,133 Transportation
Annual Creek Trail Rehabilitation
Program
$200,000 $200,000
Annual Curb Ramp Installation 150,000 150,000 300,000 Bridge Maintenance Program 560,000 740,000 710,000 2,010,000 Safe Routes to School 90,000 90,000 180,000
Sidewalk, Curb and Gutter Repair 300,000 300,000 600,000 Street Tree Services 419,000 419,000
Traffic Engineering Consultant Support 100,000 100,000 200,000 Transportation Total $1,619,000 $1,580,000 $710,000 $0 $0 $3,909,000 Total General Fund CPR Funded
Projects
$4,498,819 $4,377,657 $984,657 $1,000 $1,000 $9,863,133 11 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Capital Projects by Theme
Following are highlight
s of the capital projects included in the Proposed CIP by theme.

Administrative Facilities
The Administrat
ive Facilities theme includes projects to preserve the function and operational efficiency of City facilities such as the Triton Museum, Morse Mansion, City Hall and other historic buildings. These capital investments will provide renovations and improvements to include paint, plumbing and electrical fixtures, and roof repairs to ensure safe and appropriate facilities for the public and City employees.

Some of the major projects in the Administrative Facilities are detailed below.

Replacement of Self-Contained Breathing Apparatus (SCBA) Filling Stations This project fund
s the replacement of an SCBA filling station at Fire Station 9 that refills SCBA air bottles used by firefighters.

Stationary Standby Generators
Many of the City’s stationary emergency standby generators have reached their useful life cycles and need major repairs.

This project will replace standby generators throughout the City to improve reliability and comply with regulatory requirements.

Maintenance and Repair of City and Historic Buildings
There are four p
rojects that set aside funding to maintain and
repair the following: 1) city buildings, 2) historic buildings, 3) the Triton Museum, and 4) Morse Mansion.

Community Facilities
The Community Faci
lities theme includes projects to enhance the functionality and sustainability of many important city-owned facilities.

The major projects in the Community Facilities theme are detailed below.

Central Park Library Concrete Sidewalk Replacement Project This project repai
rs the concrete sidewalk between the handicapped parking spaces and short-term parking spaces and the building at the Central Park Library.

Parks Service Center Roof
The Parks Service Center building was constructed in the 1960's and contains the original roofing materials. The existing roof is beyond its useful life and is in dire need of replacement. The project consists of replacement of the parks service center roof and, if required in order to comply with code requirements, minor ADA upgrades to 12 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER the existing restroom. The installation of solar panels, funded by Silicon Valley Power ( SVP), will also be incorporated into the project.

Central Park Master Plan – Aquatic Center Planning and Design The George Haines International Swim Center (ISC) is beyond its useful life and needs to be replaced. This project includes a forensic engineering/architectural and failure study of the ISC facility and its infrastructure with recommendations on necessary repairs, costs, and potential closure timeline. This project also includes planning efforts for the first phase of the project, including: community outreach; master plan preparation; and development of specific plans, specifications, and cost estimate (PS&E) for a new 50-meter multi-use pool and bathhouse. The new pool facility would be located on the Kiely Blvd. side of the park, reducing existing traffic, parking, noise concerns and closure of the ISC due to failure.

Convention Center
The Convention Center’s CIP is managed by OVG360 (formerly Spectra) and is comprised of projects focused on the maintenance, repair, renovation or replacement of existing systems and infrastructure including, but not limited to HVAC, façade and aesthetic improvements, and technological advancements.

While only lim
ited funding of $0.6 million in FY 2024/25 is
recommended in this CIP, efforts continue to complete the indoor digital signage project and update the kitchens and public spaces using existing funds budgeted in FY
2021/22. The CIP projects focus on improving the existing physical condition of the building, enhancing, and ensuring safety for all visitors and staff, and creating a highly desirable and sought -after environment that positively contributes to overall visitor experience.

Electric Utility
The Electric
Utility theme includes projects that serve to maintain and upgrade electric generation, transmission, and distribution facilities and equipment to meet the mission of the Electric Utility Department, doing business as Silicon Valley Power, to be a progressive, service-oriented utility, which offers reliable and competitively priced services for the benefit of the City and its customers.

Some of the major projects in the Electric Utility theme are detailed below.

Scott Receiving Station (SRS) Rebuild and Replacement
The Scott Receiv
ing Station (SRS) was first constructed in 1968 and last upgraded in 2002. This project replaces SRS with a Gas Insulated Substation at the warehouse located within the existing station site and will include the installation of two 300 MVA 115/60 KV power transformers. Other work includes razing the existing receiving station after the new one is in service. Capacity for this site will be designed for up to 4 power transformers and will include a breaker and half bus arrangement.
13 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Kifer Receiving Station (KRS) Rebuild and Replacement
The Kifer Receiv
ing Station (KRS) was first constructed in 1975 and has reached the end of its useful life. This project replaces KRS with a Gas Insulated Substation within the existing site and will include the installation of two 300 MVA 115/60kV power transformers. Other work includes razing the existing receiving station after the new one is in service and building a new warehouse in the resulting field. Capacity for this site will be designed for up to four power transformers and will include a breaker and half bus arrangement.

Northern Receiving Station (NRS) Transformer Replacement There are two exi
sting 115/60kV transformers at the Northern Receiving Station (NRS) each having a rating of 186MVA. This project will upgrade and install two new 300MVA transformers to meet anticipated load growth with an expected service life of 30 years. Protection assets will be upgraded and installed t o monitor that the transformers are operating within the given voltage range to prevent failure. These protection assets not only ensure reliability , they also prevent widespread damage to the entire infrastructure by limiting the path of electrical current.

Grizzly Tap Line Repairs
This project replac
es a transmission line (nominally rated at 115 kV) for
interconnection with PG&E’s transmission system that connects the Grizzly Project, a hydroelectric power plant , to PG&E Bucks Creek Substation. During the Dixie fire, occurring July 13, 2021 to October 25, 2021, this line was severed, thus eliminating the transmission of power from the Grizzly Project. Grizzly project is located in Elk Creek California and has as estimated annual energy generation of 43.4 GWh in an average water year and 26.1 GWh in dry years. Replacement of this line is not expected to occur until the end of 2023.

Other Community Projects
The projects in t
he Other Community Projects theme include those that do not easily fit within one of the other CIP categories such as the Related Santa Clara Project. The goal of projects in this category is to explore opportunities, through public-private partnerships and community engagement that would guide the growth of the City by maximizing the overall economic benefit of future land uses and create a more vibrant community.

The projects in the Other Community Projects theme are detailed below.

Related Santa Clara Project
The Related Santa Clara
Project is envisioned to be an approximately 240- acre, multi -phased urban city development located in the heart of the Silicon Valley. The project will create a new center of activity for the 14 City of
Santa Clara
FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER community and region, providing signific ant mixed- use development, retail offerings, office buildings, hotel rooms, and rental residential dwellings at an urban scale, as well as accessible outdoor spaces and new infrastructure to support the development. City staff is providing development services for the project, offset by reimbursement from the Related Santa Clara project.

Tasman East Specific Plan and the Patrick Henry Drive
Specific Plan Projects
The specific plans identify infrastructure items to be funded by impact fees. The Tasman East Specific Plan and the
Patrick Henry Drive Specific Plan projects support the City administration of the specific plans. Developer
reimbursements are also budgeted for infrastructure
improvements in the event the developers build out more than their fees require.

Public Works Capital Projects Management Services
Allocation
The Public Works
Capital Management Services Allocation recoups Public Works Department staff time and non-personnel costs for general project management, design, engineering and inspection services for the City’s CIP projects.

Parks and Trails
The projects in
the Parks and Trails theme address the City Council’s adopted goal to “enhance community sports and recreational assets” by providing measurably improved play value in inclusionary, environmentally sustainable, age-friendly Parks & Recreation facilities for all residents. It also includes Trails projects by providing City facilities that serve a dual purpose of transportation (biking and walking) and recreation.

It is important to note that there are limited projects reflected in the CIP as the Quimby Act and Mitigation Fee Act revenues will be appropriated as they are received. The Parks and Trails and Community Facilities sections of this document include a prioritized list of projects that are expected to be funded from these sources once they are received. Budget amendments will be brought forward in the future to recognize these revenues and fund these projects.

Major projects in the Parks & Recreation theme are detailed below.

Community Park North - Phase I
Per the Developer Agreement, a 34.9-acre parcel, formerly part of the City's golf course, will be developed into Santa Clara’s second community park. This project is funded from Developer Contribution in the amount $5 million, of which $500,000 is for design and engineering and $4.5 million for construction of Phase I improvements. Phase I wil l include community outreach, schematic design and design development, and program planning. Phase I improvements will be determined after the community outreach process. 15 City of
Santa Clara
FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Westwood Oaks Playground Rehabilitation
This project renovates the Westwood Oaks Park with the installation of new playgrounds and amenities at the existing site, which will meet the needs of the community. The Schematic Design was approved by Council on April 19, 2022.

Sewer Utility
The capital projects
in the Sewer Utility theme support the maintenance, rehabilitation, and repair of the City’s sanitary sewer collection system which collects and conveys wastewater to the jointly owned San José-Santa Clara Regional Wastewater Facility (RWF) for treatment and disposal of approximately 13- 14 million gallons of sanitary sewage per day. The Sewer Utility maintains sewer pump stations and collaborates with the Public Works Department in the operation and maintenance of the Storm pump stations.

Some of the major projects in the Sewer Utility theme are detailed below.

San José-Santa Cl
ara Regional Wastewater Facility
The Regional Wastewater Facility (RWF) is jointly
owned by the City of San José and the City of Santa
Clara. This project funds the City of Santa Clara’s
portion of the RWF infrastructure rebuild. This project is based on the 2013 Plant Master Plan that had an
anticipated 30 -year rebuilding period. Santa Clara
has input on the CIP expenditures and budget
through staff level collaboration with San José and
Council involvement with the Treatment Plant
Advisory Committee (TPAC).

Sanitary Sewer
Improvements
This project funds repairs to the sanitary sewer system identified by the inspections performed by the Sanitary Sewer System Condition Assessment Project in FY 2021/22.

Sanitary Sewer Capacity Improvements
This ongoing project funds the study, design, and construction of sanitary sewer infrastructure improvements to address capacity deficiencies identified in the latest Sanitary Sewer Master Plan as well as improvements to meet increased capacity needs to support Santa Clara customers. This project is currently intended to fund those capacity issues identified in the 2016 Sanitary Sewer Master Plan Update, the 2021 Sanitary Sewer Management Plan (SSMP) update, and the Sanitary Sewer I/I evaluation when it is completed. 16 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Sanitary Sewer Condition Assessment
This project funds
the ongoing assessment of the City’s sanitary
sewer system via CCTV inspections. The assessment of the system is on a four-year cycle, and deficiencies will be rated based on accepted industry ratings systems, namely the National Association of Sewer Service Companies (NASSCO) system. The most serious deficiencies will be prioritized each year and are repaired under the Sewer System Improvement CIP project.

Solid Waste
The project in the
Solid Waste category provides for monitoring, data collection, reporting, repairs and maintenance at the City’s closed landfill. These efforts are performed as required by the Regional Water Quality Control Board, Bay Area Air Quality Management District , CalRecycle, and Santa Clara County Department of Environmental Health.

Storm Drain
The projects in the
Storm Drain category maintain and improve the storm drain infrastructure, including the pipe conveyance system, pump and lift stations, manholes, catch basins, outfalls, retention basins, trash capture devices, and drainage swales. The CIP also includes work related to compliance with the Municipal Regional Stormwater National Pollutant Discharge Elimination System Permit and management of stormwater runoff and collection.

Major projects in the Storm Drain theme are detailed below.

Storm Drain Slide Gate Rehabilitation
The City currently has 22 storm drain pump and lift stations. The pump and lift stations are maintained regularly to clear debris, trash, and other solids that could damage the stations and prevent them from operating at maximum capacity.

Routine maintenance is made difficult when continuous water flows into the stations and maintenance staff does not have the ability to stop incoming flow. To increase efficiency and reduce the level of maintenance effort, existing slide gates used to control storm water coming into the stations need to be replaced or additional slide gates need to be installed to help manage flows.

Storm Drain Pump Station (SDPS) Motor and Control Maintenance, Repair, and Replacement This project funds the mai ntenance, replacement, and repair of pumps, motors, controls, telemetry, valves, instrumentation and related equipment for the City’s 22 storm drain pump stations. 17 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Technology and Equipment
The capital projec
ts in the Technology and Equipment category serve to increase efficiency, security, and functionality throughout the City. It should be noted that, effective FY 2022/23, several of the Information Technology Department projects will be shifted to the Information Technology Services Fund in the operating budget. Additionally, effective FY 2025/26, several Fire Department projects are planned to be shifted to the Fire Department’s General Fund operating budget.

Some of the major projects in the Technology and Equipment program are detailed below.

Fire Protective Equipment Replacement and Fire
Defibrillator Replacement
The Fire Department requires personal protective
equipment and gear for its firefighters. This project
provides funding for the regular replacement of this
equipment and gear once it reaches the end of its
useful life. Funding is also allocated to replace
defibrillators used by paramedics on Advanced Life
Support (ALS) incidents. Effective FY 2025/26, these
project budgets will be considered in the Fire
Department’s General Fund operating budget.

Utility Management Information System Enhancements
This project upgrades the Utility Billing System for compliance and business process improvements. This includes implementing a new customer self -service solution for the City’s utility customers, including a mobile app for enhanced customer experience and functionality as well as outage reporting. Upgrades will also allow the City to achieve mandated Credit Card (PCI) compliance and transition field services capability (turn on/off) to the cloud for efficiency and improved customer service.

Geospatial Information System (GIS) Enterprise System
This project prov
ides funding towards the City’s investment in GIS technologies to build a citywide GIS enterprise system. The goal of Enterprise GIS is to distribute geospatial data and functionality throughout the City while leveraging and integrating department layers. Enterprise GIS streamlines engineering, permitting and inspection processes; improves land management; improves asset utilization of public services; and helps engage the community through increasing shared information.

Replace Network Equipment
This multi-year upgrade replaces end-of-life equipment and transforms the City’s core network infrastructure to enhance the City’s cybersecurity posture, support growth, and update technologies to enable the city’s evolving computing needs. Effective FY 2022/23, this project’s funding has shifted to the Information Technology Department’s operating budget.
18 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Transportation
The projects in the Transportation theme design, construct, and maintain local transportation facilities.

Transportation facilities include public streets, sidewalks, curb/gutters, handicap ramps, bicycle facilities, street intersections, crosswalks, traffic operations devices, traffic signals and equipment, traffic and street signage and pavement markings, and landscaped areas.

Some of the major projects in the Transportation program are detailed below.

Annual Street Maintenance and Rehabilitation Program
The City has an ongoing allocation for the maintenance and repair of City streets. The City uses the Pavement Management System (PMS) to determine which streets are in critical need of repair or maintenance. The yearly projects include placing surface seals, resurfacing, and/or reconstruction. Ancillary work includes removing and replacing failed pavement, replacement of concrete curbs, gutters, sidewalks, and curb ramps, and installation of roadway striping and pavement markings. The City’s current PCI is 75. Without full funding, the PCI is expected to drop to 70 over the next five years.

Bridge Maintenance Program
This project fun
ds preventative maintenance and rehabilitation for the City's existing bridge inventory. The bridge inventory includes 49 bridges. Of these bridges, two are jointly owned with City of San Jose, and seven are jointly owned with City of Sunnyvale. There are also three additional bridges owned by the State of California for which the City has responsibilities under maintenance agreements.

Pedestrian and Bicycle Enhancement Facilities
City Council app
roved the Santa Clara Bicycle Plan Update and
Pedestrian Master Plan in 2019. Both plans recommend
improvement projects that are currently unfunded. Staff will be pursuing various grant opportunities for project funding. This project would be used to fund the local match associated with grant applications for bicycle and pedestrian facilities. This project will also supplement funding for other bicycle lane and pedestrian improvements.

Public Right-of-Way ADA Improvements (Settlement Agreement) The City entered
into a settlement agreement based on litigation requiring the City to perform improvements in the public right-of-way to remove barriers to accessibility under the Americans with Disabilities Act (ADA). The improvements include removal of concrete sidewalks, repair of asphalt, curb ramps and pedestrian street crossings. Based on accessibility standards, additional improvements may be identified and later incorporated into this project. This project uses existing funded budgeted through FY 2021/22. 19 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Sidewalk, Curb and Gutter Repair
This project funds
the repair of concrete sidewalks, curbs, and gutters to maintain accessibility and minimize trip and fall hazards at locations identified throughout the City. New ADA ramps are installed through this project to meet requirements as necessary.

Uncontrolled Crosswalks Improvements Project
This project is
designed to develop a program and enhance some
of the approximately 200 uncontrolled crosswalks in Santa Clara.

The project will assess existing crosswalks that do not contain traffic signal, beacon, or stop controls for vehicles to determine if improvements are needed. This project is partially funded.

Water and Recycled W
ater Utilities
The capital projects
in the Water and Recycled Water Utilities theme support the design, construction, distribution, metering, quality monitoring and system maintenance for both potable and recycled water. The Water Utility operates and maintains approximately 27,000 service connection points, 335 miles of distribution mains, seven storage tanks, and 26 groundwater wells. The recycled water system distributes highly treated wastewater for non-potable uses. Currently, there are over 280 service connections and 33 miles of distribution pipelines.

Some of the major projects in the Water Utility are detailed below.

Asset Management Program
This project f
unds the implementation of a formal, comprehensive Asset Management Program for the City's Water and Sewer Utilities, which includes risk and resiliency assessments, hydraulic modeling, and a rate study for the water and sewer systems. This formalized Asset Management Program will provide for the efficient management of the water and sewer infrastructure as well as manage risk to the systems and ensure resiliency into the future.

Supervisory Control and Data Acquisition (SCADA) Improvements This project funds
improvements and upgrades to the existing Supervisory Control and Data Acquisition (SCADA) system and funds any needed replacements to system hardware or software. Once this system is fully upgraded, it will allow for the real time collection of data regarding the operation of the water, sewer, and storm systems, including alarms to warn of dangerous, or soon to be dangerous conditions, and the ability to control the operation of certain assets remotely.

New and Replacement Wells
This project funds
the study of the feasibility of two new replacement groundwater wells for the City, as well as the associated design, engineering, and construction management services. The aim is to replace groundwater wells that are no longer serviceable and construct new wells to maintain the adequacy of water supply and the diversity of the City's water portfolio into the future. 20 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Distribution System Replacement/Restoration
The Water & Sewer Utilities Department aims to rehabilitate or replace an average of 10,000 linear feet (LF) of water utility mains in the City each year. In addition, this project funds the construction, replacement, rehabilitation or relocation of other water related appurtenances, such as backflow preventers, hydrants, meters that are not funded by developer contributions. By analyzing the frequency and location of water main breaks and considering information about the age of water infrastructure, replacements can be targeted to the infrastructure in the worst condition.

Recycled Water System Mains and Services
This project funds the installation/upgrade/extension of recycled water services and mains for incoming developments as
financially and practically feasible. Recycled water supports the broadening of the City’s water portfolio and offsets the public’s reliance on potable water for non-portable uses (such as irrigation, industrial processing, cooling towers, and toilet flushing), and supports the City’s overall sustainability strategy. Currently, there are over 280 service connections and 33 miles of distribution pipelines.

Unfunded Projects and Priorities
The funding available to support capital projects is not sufficient to meet the infrastructure needs in many areas.

The chart below identifies unfunded projects of approximately $571.6 million that were itemized as part of this CIP process.

Table 5: Unfunded CIP Projects by Theme
Theme Unfunded Projects
Administrative Facilities $75,495,667
Community Facilities 244,581,305
Convention Center 12,649,017
Parks and Trails 141,484,400
Storm Drain 35,317,032
Technology and Equipment 3,492,520
Transportation 58,544,015
Total Unfunded Projects $571,563,956
21 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER The unfunded projects identified in this report represent only a portion of the unmet/deferred infrastructure needs in the City, with many significant needs spread across the capital theme areas. • 2015 Storm Drain Master Plan identified $343 million in projects (2018 dollars), including almost $68 million in high priority projects
• Transportation infrastructure (e.g., traffic signal infrastructure replacement, uncontrolled crosswalks, Bicycle Plan, Creek Trail Master Plan, and pavement)
• Public Buildings (new City Hall, existing City Hall, fire stations, historic buildings, corporation yard, ADA plan)
• Expand capacity (e.g., library)
In addition to these unfunded needs, there are other City Council priorities that have not been funded. On December 14, 2021, City staff presented the FY 2020/21 Budget Year -End Report that included $400,000 for City Council initiatives. Of this amount, $75,000 was allocated to support homelessness and the remaining balance of $325,000 is available to carryover to FY 2022/23 to support Council initiatives . Discussion will be included in the Study Session to obtain feedback and direction from the City Council regarding the potential allocation of these funds.

As identified for the 2022 City Council Priority Setting Session, the following capital priorities are unfunded:
• Adopt Vision Zero Policy – On November 16, 2021, Council voted to move this item to Priority Setting Session and directed staff to return to Council with a funding source in the amount of $315,000 prior to the session.
• Transportation “Quiet Zone” – Ci
ty Council voted at the November 16, 2021 Council meeting to discuss this item at the February 2022 Priority Session and staff researched funding sources, such as the infrastructure bill or grant programs. No grant opportunities were identified and the City’s Legislative Advocacy consultant, Townsend Public Affairs were not aware of other opportunities at this time. The estimated cost for the study is $300,000.
• Transportation Demand Management Study – Sta ff is currently working on Request for Proposals (RFP) to get a third- party consultant as well as inclusion of a fee to fund work to include developing a TDM template and requirements for developers. At the January 11, 2022 City Council meeting, the Council voted to note and file for the RFP to include support for online reporting of TDM reports. • Station Area Plan – O n December 7, 2021, City Council approved $400,000 in grant funding from the MTC for the preparation of the Santa Clara Area Plan. The City will also have access to up to $500,000 of consultant services funded by the Valley Transportation Authority. The typical total cost is $1 million - $1.5 million which includes preparation of a Specific Plan and CEQA review. Additional funding will be necessary to complete and adopt the Specific Plan. Work on the Specific Plan is scheduled to begin in the summer of 2022 and extend through 2025.
• Downtown Task For ce/P
recise Plan – Ongoing meetings continue to focus on best approaches for revitalizing downtown efforts. The schedule anticipates that City Council will consider adoption of the Precise Plan in Fall 2022/Winter 2023. The Task Force requested a scope and cost to analyze relocating City Hall downtown. The study conceptually analyzes moving City Hall downtown, including conceptual building form/space programming and an economic and financial analysis. The estimated cost for conceptual land use and economic analysis is $400,000, which is not funded. 22 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Separately, there have been numerous Council Initiatives that have been requested and or discussed at the City Council that do not have capital funding identified. These include, but are not limited to:
• Ballot measu re for infrastructure bond or tax in November 2024 • Revisions to the El Camino Real Specific Plan
• Sanitary Sewer laterals
• Construction of Lawn Bowl Facility
• Crosswalks/Beacons at various locations
• Feasibility study for constructing a roadway undercrossing at the railroad tracks separating Benton Street and Brokaw Road near the Santa Clara Caltrain Station and Future BART Station • Swim center improvements
CIP Funding Strategies
The City has his
torically relied on annual General Fund savings allocated to the Capital Projects Reserve to support various capital improvements not supported by dedicated funding sources (e.g., utility infrastructure funds, dedicated transportation and parks funds) . The Capital Projects Reserve does not provide cons istent funding nor is it sufficient to address the significant unfunded/unmet capital infrastructure needs. In fact, with the recommendations included in this Proposed CIP, the Capital Projects Reserve is fully allocated, and would need to be replenished at a future date with unknown sources. Additional capital revenue sources are needed to start meeting these needs. In the future, this could include a General Obligation (GO) bond measure, a parcel tax measure, and/or other dedicated funding (e.g., allocate an increase to the documentary transfer tax to fund City infrastructure). These funding strategies have successfully been used in other jurisdictions. For example:
• City of Campbell – I
n 2018, voters in Campbell approved a $50 million GO bond measure to construct and/or renovate City facilities to house police and library services. • City of Gilroy – C ity voters approved a $37 million GO bond measure in 2008 to replace the outdated Gilroy library building.
• City of Mountain View – t he City dedicates revenues from its construction and conveyance (transfer) tax to support capital improvements (public park, playground, cultural, educational, recreational, police, fire, sewer, storm drain, water system and street improvements) and for operational and maintenance costs related to capital improvements. The transfer tax in Mountain View is $3.30 per $1,000 of value of the property versus the City of Santa Clara total of $1.10 per $1,000 of value (city receives $0.55 per thousand).
• City of Palo Alto – the Cit
y dedicates a portion of its Transient Occupancy Tax to capital improvements.

In addition, Palo Alto voters approved a $76 million GO bond measure in 2008 to construct a new Mitchell Park Library and Community Center and renovation and improvements to Downtown and Main libraries. • City of San Jose – the City dedicates revenues from its construction and conveyance (transfer) tax to support capital improvements (communications, fire, libraries, parks, park yards and service yards) and operational costs associated with capital improvements . The conveyance tax in San Jose is $3.30 per $1,000 of value of the property versus the City of Santa Clara total of $ 1.10 per $1,000 of value (city receives $0.55 per thousand) . The City also uses proceeds from two construction-related taxes, the construction excise tax and the building and structure construction tax, to support traffic capital improvements. In addition, bond measures have been approved to address significant infrastructure needs. In 2018, San Jose voters approved Measure T, a $650 million GO bond measure to support public safety infrastructure, bridge repairs, repave streets, prevent flooding, and other critical infrastructure. In 2000, the voters approved a $212 million library GO bond and a $228 million GO bond for parks and 23 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER recreation, and in 2002 the voters approved a $159 million GO bond for emergency facilities improvements.

Staff will continue to recommend the pursuit of alternative funding sources to improve the City’s infrastructure to meet the needs of our community. Because these alternative funding strategies typically require voter approval, efforts to inform residents about these unmet capital needs and obtain their feedback are critical to gauge community priorities. These efforts are expected to continue following the adoption of this budget, allowing time for a robust community engagement process.

Operating Budget Impacts of Capital Projects
The table below summari
zes the additional annual resources required to operate and maintain new facilities coming on-line during the out years of the CIP. The FY 2022/23 Budget includes operating and maintenance funds for facilities.

Table 6: Operating Budget Impacts by Theme
Theme 2023/24 2024/25 2025/26 2026/27
Convention Center $6,000 $6,000 $6,000 $6,000
Electric Utility 120,000 150,000 180,000 210,000
Transportation 3,250 3,350 18,350 28,350
Total Operating Budget
Impacts $129,250 $159,350 $204,350 $244,350
In addition, for
certain parks projects, the City requires funding for construction, operation and maintenance for a minimum of 40 years from developer-dedicated parkland or creation of a special district.

OPERATING BUDGET

OVERVIEW
Ten-Year Financial Forecast and Economic Outlook
In January 2022 , a T
en-Year General Fund Forecast was prepared comparing anticipated General Fund revenues and expenditures to provide policy makers and the public an assessment of the City’s financial health.

In the January Forecast, the first two years (FY 2022/23 and FY 2023/24) showed a net General Fund shortfall of $19.6 million, followed by small surpluses in the out-years. Since the development of the Forecast, staff has continued to refine the revenue estimates and expenditure budget for the General Fund, resulting in minor adjustments. Overall, the forecast over the first two years remains at a shortfall of $19.6 million. The remaining years of the forecast continue to show small annual surpluses ranging from $0.7 million to $4.0 million as reflected in the chart below.

The model assumes shortfalls or surpluses are solved with ongoing actions each year. To the extent solutions to close the gap, or ongoing dollars are not fully spent in years with surpluses, these figures would carry over to the next fiscal year.
24 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER April 2022 General Fund Forecast
Note: the Forecast does not include the cost to address unmet/deferred infrastructure needs, the cost to fully fund public safety equipment replacement, additional contributions to reserves, one- time funding sources, and one-time expenditure needs.

Economic conditi
ons have improved significantly since the start of the pandemic, with many indicators close to pre-pandemic levels. On a national level, the unemployment rate dropped to 3.6% in March 2022. This rate was well below the record setting high of 14.7% in April 2020 and is almost at the pre-pandemic unemployment rate of 3.5%. In February, the number of unemployed persons decreased to 6. 0 million. This unemployment figure remains slightly above the pre-pandemic level of 5.7 million.1 1 https://www.bls.gov/news.release/pdf/empsit.pdf

($25.0)
($20.0)
($15.0)
($10.0)
($5.0)
$0.0
$5.0
FY
2022/23
Forecast
FY
2023/24
Forecast
FY
2024/25
Forecast
FY
2025/26
Forecast
FY
2026/27
Forecast
FY
2027/28
Forecast
FY
2028/29
Forecast
FY
2029/30
Forecast
FY
2030/31
Forecast
FY
2031/32
Forecast
FY
2032/33
Forecast
$(23.0)
$3.4 $2.6 $1.8
$4.0
$2.4
$0.7
$3.2
$1.3
$2.9 $3.2
Millions
$19.6 M
Shortfall
through FY
2023/24
25 City of
Santa Clara
C!had 1. Unemployme1:1t raiE!, seasorhl lly adjus.led'.

Marcti 2019· - March 2022
Pereeffi
116.

14.0 1:2.D
1 □ .0

8.0 il . □

4.0 .IJ
-
' ' \
~ -
'
~~
-
Chad 2. Nonfarm payroll employ,ment, seiiSOrnall'f adj u3ted.

Marc'h 201,9 - March 2022·
lllrura11iS
1 6 □ , 00!l
5,000
Mor-19 s,,~- 1~ Mor-·211• 8 "1!-:!D l.lor-'21 2"1>'21 1,1,,,.n FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER In 2021, the Gross Domestic Product (GDP) increased by 5.7%, in contrast to the 3.4% decrease in 2020. The increase in 2021 reflected growth across all the major subcomponents, led by personal consumption expenditures, non- residential fixed investment, exports, residential fixed investment, and private inventory investment.2
While GDP has now surpassed
the pre- COVID peak in the
second quarter 2021, it has not
yet reached the pre -pandemic
trend. Per the March 2022 UCLA
Anderson Forecast, GDP is
expected to reach the pre-
COVID trend by mid- 2022. On
an annual basis, the UCLA
Forecast projects continued
GDP growth of 4.3% in 2022,

2.8% in 2023, and 2.3% in 2024.

The UCLA forecast, however,
comes with considerable
uncertainty. Major risk factors
include the future course of the
pandemic as well as the impacts
of the war between Russia and
Ukraine.
3 Improvement continues at the State and local level. After the State’s largest increase in the unemployment rate in April 2020, the California unemployment rate dropped to 4.9% in March 2022. With the continued addition of jobs, California has now regained 2.46 million jobs, or nearly 90% of the 2.76 million jobs lost due to COVID-19 2 https://www.bea.gov/sites/default/files/2022-02/tech4q21_2nd.pdf 3 UCLA Anderson Forecast, March 2022
Source: UCLA Anderson Forecast and U.S. Bureau of Economic Analysis Note: $ Billions, chained 2012 prices
26 City of
Santa Clara
Real GDP: Percent change from preceding quarter
35 25
15 5
-5
-15
-25
-35
1 2018
U.S. Bureau of Economic Analysis
2019 2020
Re~IGDP Le,;els, Semin~ , Adi stedAn~a l Rates, Actual
Real GD , $ Billions
Zl,:500
21,000
o,soo
Zll, □ 00
19,500
Ul , □ 00
Hl.:500
11!l, □ OO
11, 00
u, □ oo
2017 ZOU!
•
1 2021
Seasonally adjLBted at annual rates
F,:;rac~ 2016-102
Z02 "1. Z2 202.4
FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER in March and April 2020. Fewer than one million Californians are unemployed for the first time since February 2020.4
The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 2.5% in March 2022, down from the March 2021 level of 5.8% and the pre-pandemic February 2020 level of 2.6%. Between March 2021 and March 2022, this region added 62,300 jobs, a 5.8% increase. The largest growth was in the leisure and hospitality sector that added 27,300 jobs, accounting for nearly 44% of the overall year-over-year employment gains. The next largest increases were in professional and business services (up 10,900 jobs), private educational and health services (up 8,500 jobs), manufacturing (up 4,600 jobs), and information (up 3,300 jobs).
5 The Adopted FY 2021/22 and FY 2022/23 Biennial Operating Budget included a budget balancing strategy that relied on a combination of expenditure reductions, revenue solutions, and use of reserves. The use of ongoing and one- time solutions balanced the comp eting goals of aligning ongoing revenues and expenditures and minimizing the service delivery impacts to the community. This also allowed for time to evaluate the post COVID- 19 recovery.

Additional budget balancing actions are expected to be brought forward in the FY 2023/24 and FY 2024/25 Biennial Operating Budget that will be adopted in June 2023. Based on the most recent forecast, a General Fund shortfall of $19.6 million is expected to be addressed as part of that budget process. This shortfall figure may be adjusted in the next Ten-Year General Fund Forecast that will be updated in January 2023.

Amendments to the FY 2022/23 Adopted Operating Budget
The City Council
approved the FY 2021/22 and 2022/23 Biennial Operating Budget in June 2021 . While this year’s budget is focused on the capital budget, amendments to the FY 2022/23 Adopted Operating Budget are necessary to reflect the updated revenue estimates and to account for updated labor and non-personnel costs in the General Fund and other funds.

The 2022/23 Propos ed Budget also re
flects an increase of 32.0 positions from the 2021/22 Adopted Budget.

The following positions were added during FY 2021/22: 1) 18.0 non-General Funded positions to support the Electric Utility; 2) 10.0 positions in the Police Department to restore several eliminated and frozen positions from the $1.7 million added by the City Council for this purpose in the FY 2021/22 and FY 2022/23 Biennial Operating 4 https://edd.ca.gov/en/about_edd/news_releases_and_announcements/unemployment-March-2022/ 5 https://www.labormarketinfo.edd.ca.gov/file/lfmonth/sjos$pds.pdf San Jose-Sunnyvale-Santa Clara Metropolitan Statistical Area Unemployment Rate Historical Trend
27 City of
Santa Clara
--......

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER Budget; and 3) 4.0 positions supported by various funds and reimbursements. These positions are detailed in the Budgeted Positions section of this document.

The detailed amendments to the FY 2022/23 Operating Budget by fund can be found in the Appendices section of this document.

Amendments to the FY 2022/23 Budget and Fiscal Policies The City’s Budget
and Fiscal Policies define the way the City manages its budget, reserves, interfund loans, investments, and debt with the goal of long- term fiscal sustainability. Amendments to the Budget and Fiscal Policies are recommended to 1) update the reserve definitions for the Utility Funds; and 2) eliminate the Building Inspection Reserve in the General Fund; this reserve, which previously accounted for any excess revenues over expenditures for building development services, is no longer necessary due to the creation of a separate Building Development Services Fund. Updates to the Utility Fund Reserves section include the addition of a Special Projects Reserve, the renaming of the Construction Reserve to Infrastructure Reserve and a modification of the reserve calculation, and updates to the Operations and Maintenance Reserve for the Electric Utility.

These revisions are reflected in the Budget and Fiscal Policies section of this document.

Stadium Authority
The Stadium Authorit
y exists as a public body, separate and distinct from the City, and is established to provide for development and operation of Levi’s Stadium. It is structured so that the City will not be liable for debts or obligations of the Stadium Authority. The Stadium Authority’s stand-alone Fiscal Year 2022/23 Operating, Debt and Capital Budget was adopted by the Stadium Authority Board on March 15 , 2022 and can be found at https://www.santaclaraca.gov/our-city/santa-clara-stadium-authority/financial-reports#Stadium-Budget. This budget reflects the revenues and expenditures related to the support of the Stadium . In the City bu dget, City expenditures related to the Stadium Authority are budgeted in the General Fund, under Non-Departmental, and are reimbursed by the Stadium Authority.

SUMMARY
The City of Sant
a Clara takes pride in providing excellent services to the community and will continue to work to address the current budget challenges in ways that minimize impacts to the community to the extent possible.

This budget presents a spending plan for capital improvements with the funding available and also adjusts the FY 2022/23 Operating Budget.

The Proposed Fiscal Year 2022/23 and 2023/24 Biennial Capital Budget is consistent with the City’s mission and appropriates the resources to address the highest priority capital infrastructure needs . There remains, however, significant unfunded capital infrastructure needs for which there are no funding sources. This is an ongoing challenge and additional revenue sources will be needed in the future to address those needs.

The FY 2022/23 General Fund balancing strategy adopted as part of the FY 2021/22 and FY 2022/23 Biennial Operating Budget remains in place. Because the FY 2021/22 and FY 2022/23 Biennial Operating Budget used one-time balancing actions and reserves, additional budget balancing actions will be necessary in the upcoming FY 2023/24 and FY 2024/25 Biennial Operating Budget that will be adopted in June 2023. Based on the latest Ten-Year General Fund Forecast, an ongoing shortfall of $19.6 million is projected and will be addressed in the 28 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSMITTAL LETTER next Biennial Operating Budget. A combination of revenue solutions, expenditure reductions and use of reserves is again expected to be used. Work to identify new ongoing sour ces has been underway, including fiscal sustainability measures for consideration on the November 2022 ballot. These measures will be critical to better position the City moving forward and reduce the level of service disruptions that may be needed to address the budget deficit.

City departments worked together to prepare this Proposed Budget for consideration by the City Council and the community. The hard work and dedication of City staff are greatly appreciated through this current process and will be critical as we continue to bring forward balancing actions in the next biennial operating budget.

In closing, I want to thank the City Council for our continued strong partnership in advancing the City’s strategic priorities in a fiscally responsible manner. This continued focus and discipline will be necessary as we face the budget challenges in the coming years.

Respectfully submitted,
Rajeev Batra Kenn Lee
City Manager Director of Finance
29 ffi Cityof
~ Santa Clara
Kenn Lee
D iredor of Fina nee
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30 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMRPOVEMENT PROGRAM BUDGET | CITY AT A GLANCE

SANTA CLARA AT A GLANCE
The City of Santa Clara (City) has always reflected the progressive, bellwether nature of California. It is one of the oldest cities in the state, an agricultural powerhouse in the 1800s, and the birthplace of many of the technology innovations that created Silicon Valley in the 1900s. Today, it maintains its leading-edge status as a community that is nationally recognized for its livability and a city that has a sustainable, bright future powered by the private investment of billions of dollars in new development and growth opportunities.

History
Santa Clara was incorporated in 1852 as a Charter City with a Council/Manager form of government although it existed as a community for hundreds of years prior to that as a village for Ohlone Indians and their ancestors. European explorers came to the area in the mid-1700s and settled it as a military and religious outpost. It is called the “Mission City” in reference to the Mission Santa Clara de Asis, which opened in 1777 as one of 21 Spanish missions established by Franciscan padres along El Camino Real in California.

Size
Santa Clara encompasses 18.41 square miles in the heart of Northern California’s Santa Clara County, also known as Silicon Valley, in recognition of the region’s leadership in technology innovations that changed the way the world lives, works, learns and plays. It is part of the burgeoning South Bay metropolitan area that includes the City of San José, the 10th largest city in the U.S., and the wider nine-county San Francisco Bay Area that is the fastest growing region in the state.

Population
1 The 2021 population of the C
ity of Santa Clara is estimated at
130,746 and is one of the most diverse in the nation with about 44% of residents born outside the U.S. Over half of the population is non-Caucasian. The City’s residents are also highly skilled and educated, with approximately 60% of adults holding a bachelor ’s degree or higher. The median age is 33.9 years and the median household income is reported at $126,006.
31 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMRPOVEMENT PROGRAM BUDGET | CITY AT A GLANCE Business1

Businesses in City of Santa Clara range from entrepreneurial start-ups, to longstanding family owned firms, to the international headquarters of Fortune 500 corporations. Millions of square feet of new office and retail projects are under development or in planning stages, greatly expanding the City's capacity to accommodate businesses that want to start, relocate or expand in a high energy, dynamic environment. Some of the largest employers within the City include Advanced Micro Devices Inc., Applied Materials Inc., California’s Great America, and Intel Corporation. In 2021, Silicon Valley (San Jose-Sunnyvale-Santa Clara metropolitan statistical area) was ranked the most dynamic metro area in the United States by Heartland Forward due to its outstanding economic performance.

City Services

Santa Clara is a full- service city with its own police and fire departments and electric, water and sewer utilities. Other core services include libraries, parks, award winning services and recreational programs for seniors and youth, neighborhood beautification, free citywide outdoor Wi -Fi, special events and support of history and art museums. The City also provides development and planning services, housing programs, and maintenance of the City’s transportation infrastructure. In 2020, the City was ranked #18 on BarBend’s list of California’s Top Cities for Fit Lifestyle.

Housing1

There are approximately 45,000 households in the City and housing stock continues to expand through new transit-oriented developments that offer lifestyle alternatives to the City’s traditional single- family neighborhoods and carefully preserved historic homes. The City is in a metropolitan area that is one of the highest priced housing markets in America. In 2021, the median price of a single-family home was $1,641,000. As of March 2022, the average rent for a one-bedroom apartment is $2, 400. Santa Clara has invested millions of dollar s in affordable housing projects that provide 1,572 units for low income seniors, families, homeless and disabled residents.

Transportation

In addition to 610 lane miles of City-owned roads and streets, Santa Clara is crisscrossed by State Highway 101 and two regional expressways. Public transit services in the City include buses, light rail, Caltrain and Amtrak. A future extension of BART into the South Bay is being planned and will terminate in Santa Clara, and the Norman Y. Mineta San José International Airport border s the City. Santa Clara has also placed a priority on providing additional bicycle facilities throughout the City and is in the process of completing a Creek Trail Network Expansion Masterplan to expand trail facilities to complement the existing San Tomas Aquino/Saratoga Creek Trail.
32 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMRPOVEMENT PROGRAM BUDGET | CITY AT A GLANCE Education1
Public schools serving residents of Santa Clara are under the authority of independent school districts . The City works closely with the school districts to provide quality educational opportunities for grades K-12 and students attending Mission College for a two- year degree or professional development. Santa Clara University, the oldest institution of higher learning in California, is in the historic Down town Quad area of the City and enrolls 5,694 undergraduate students and 2,975 graduate students.

Infrastructure1

Each year, the City makes significant investments in maintaining, expanding, and improving civic infrastructure for the benefit of residents and businesses. The City has the lowest combined water, sewer, and electric rates in the nine Bay Area counties. The City- owned electric utility, Silicon Valley Power (SVP), is recognized as a Smart Energy Provider from the American Public Power Association for demonstrating a commitment to and proficiency in energy efficiency, distributed generation and environmental initiatives that support the goal of providing safe, reliable, low-cost and sustainable electric service. It is also recognized by the Environmental Protection Agency (EPA) for its Green Power program, which is included on the nation-wide Green Power Communities List. Over the past few years, the City’s water storage
and delivery system has
been upgraded and it is
one of the most successful purveyors of recycled water with 33 miles of recycled water pipelines within Santa Clara’s city limits and about one billion gallons each year. The City is a partner in the San José- Santa Clara Regional Wastewater Facility and is investing $300 million over the next 30 years to update the aging facility and expand capacity. The Water & Sewer Utilities is a past recipient of the California Municipal Utilities Association (CMUA) Resource Efficiency Award for its recycled water program – retrofits for developments. In 2021, the Water & Sewer Utilities system received the Santa Clara Valley Section of the Clean Water Environment Association’s Sewer Collection System of the Year-Medium Size.

33 City of
Santa Clara

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMRPOVEMENT PROGRAM BUDGET | CITY AT A GLANCE Economic Development
The City of Santa Clara welcomes business, and that strategic attitude is paying off with billions of dollars in private investment currently under construction or in the pipeline. As projects come online, the City’s economic base is broadened and diversified, ensuring greater fiscal stability in the future as well as increased revenues to the City’s budget.

Development projects approved over the past fiscal year include office space, residential, affordable housing,
hotel, retail, and mixed-use developments. Some of the
largest projects include: advancement in entitlements
and building permits for Related Santa Clara, a new
multi-phased, mixed- use development of up to 9.16
million gross square feet of office buildings, retail and entertainment facilities, residential units, hotel rooms, surface and structured parking facilities; a new 396-room Extended Stay hotel at Brokaw Road and Coleman
Avenue; and with the Council approval of the Patrick
Henry Drive Specific Plan, capacity for the development of up to 12,000 new residential dwelling units or 785,000 square feet of office space (replacing the existing 200,000 square feet of office space) and 10,300 residential units, and 310,000 square feet of non- residential uses, including 200,000 square feet of other new neighborhood -serving retail and public facilities. In addition, two data centers located at 1200 Memorex Drive and 2905 Stender Way were grant ed entitlements. More information on new development projects can be found on the City’s website SantaClaraCA.gov/business - development under the “Development Projects” link.

1 California Department of Finance Demographic Research Unit; January 2021 and January 2020 City Population Table US Census QuickFacts, March 2022
Santa Clara County Association of Realtors Year End Statistics 2021 Santa Clara University 2021-2022 Undergraduate Bulletin Zumper Rent Prices –March 2022
Environmental Protection Agency – Green Power Communities Employment Development Department, Major Employers in California 34 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMRPOVEMENT PROGRAM BUDGET | CITY AT A GLANCE

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FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMRPOVEMENT PROGRAM BUDGET | CITY AT A GLANCE

36 Community • P.rofile1
Geography
P.efS O:JllS per Sqliar e Mi e·
Santa Clara. 6,327
COil.i ty: 11381
Population
-Santa Clarra County
110.,746
Age
Santa Clara
Mediian A,ge
JJ.•9 years
Age ·18-64:
69%

1.934! 171
Con
MedfanAge

31.1 ~ears
Foreign Born
Santa Clara.: 44%
County: 39%
Media.n Family lncome
-Santa Ciara
$26.~06
County
$ '24,1155
L,md in Sqll!.lare Miles
Santa Clara:: 118 .. 41
Coun : 1s290
Diversity
Educat ·ion
Hig lili Sdim ol Gradu ate or Hig 111.er
sanra •Clara
9J%,
County
88%
Baclil:elor's Degree or Hig liler
Sama Clara County
60% 52%
Labor Market
LaborForoe
Santa Cla!°a: 11 800
County: 11041,9 D
Ulne.mployment Rate
Santa Clara: 2.4%
Counw: 2.9%
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Rez:e5/'Gi\J lJ1 .: Data CD r oo Qrgamtzarla!i R.inRl'llg By A,fe!1/a Age

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SANTA CLARA COMPARISON TO OTHER

LOCAL CITIES

SANTA CLARA COMPARISON

TO OTHER LOCAL CITIES IN THE LOCAL REGION

The following graphs compare FY 2021/22 per capita revenues from key sources and total budgeted expenditures for FY 2021/22 in the City of Santa Clara to other cities in the local region. Sales tax, property tax, and transient occupancy tax categories are included as they are the largest economically sensitive General Fund revenue sources for the City.

Expenditure data for selected city budgets in relation to their respective population is included for all funds and the General Fund for FY 2021/22. The assets per capita for FY 2020/21 are also shown. It is important to note Santa Clara and Palo Alto include City -owned utilities that result in relatively higher budgets and assets per capita.

$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
FY2021/22 Property Tax Per Capita
Source: City of Milpitas FY 2021/22 Adopted Budget

37 City of
Santa Clara

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SANTA CLARA COMPARISON TO OTHER

LOCAL CITIES

$0
$100
$200
$300
$400
$500
$600
FY 2021/22 Sales Tax Per Capita
$0
$20
$40
$60
$80
$100
$120
$140
FY 2021/22 Transient Occupancy Tax Per Capita
Source: City of Milpitas FY 2021/22 Adopted Budget

Source: City of Milpitas FY 2021/22 Adopted Budget

38 City of
Santa Clara
I
-
■ ■ I I I I I

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SANTA CLARA COMPARISON TO OTHER

LOCAL CITIES

$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY 2021/22 General Fund Revenues per Capita
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY 2021/22 General Fund Expenditures per
Capita
Source: Each city FY 2021/22 Adopted Budget
Source: Each city FY 2021/22 Adopted Budget
39 City of
Santa Clara

I I I I I I
1 I I I I I I I

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SANTA CLARA COMPARISON TO OTHER

LOCAL CITIES

Note: The budgets for Santa Clara and Palo Alto include City-owned utilities that account for a significant portion of the budget.

Source: Each city FY 2020/21 Annual Comprehensive Financial Report

Note: The budgets for Santa Clara and Palo Alto include City-owned utilities that account for a significant portion of the budget.

$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
FY 2021/22 Budget (All Funds)
Per Capita
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
FY 2020/21 Assets Per Capita
Source: Each city FY 2021/22 Adopted Budget
40 City of
Santa Clara
I
■
I I I
I I I

I I I I I
I I I

FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ROSTER AND MANAGEMENT TEAM

Roster of City Council and Commission Members

City Council
Mayor Lisa M. Gillmor
Councilmember District 1 Kathy Watanabe
Councilmember District 2 Raj Chahal
Councilmember District 3 Karen Hardy
Councilmember District 4 Kevin Park
Councilmember District 5 Sudhanshu Jain
Councilmember District 6 Anthony J. Becker

Board of Library Trustees Civil Service Commission
Leonne Broughman, Jan Hintermeister,
Stephen Ricossa, Debbie Tryforos, Jonathon
Evans
Tahir Naim, Willie D. Brown Jr., John Casey,
Franklin J. Felizardo, Carolyn McAllister

Cultural Commission Historical and Landmarks Commission Candida Diaz, Debra von Huene, Jonathan
Marinaro, Paul McNamara, Louis Samara,
Siddarth Sundaram, Jennifer Garcia Vega
Kathleen Romano, Michael Celso, Megan
Swartzwelder, Patricia Leung, Amy Kirby,
Ana Vargas-Smith, Ed Stocks

Housing Rehabilitation Loan Committee
Darius Brown, Carmen Pascual
Parks and Recreation Commission
Burt Field, Sajid Hai, Andrew Knaack,
Kelly Gonzalez, Joe Martinez, Eversley Forte,
Dana Caldwell

Planning Commission Salary Setting Commission

Nancy A. Biagini, Yuki Ikezi, Ricci Herro,
Qian Huang, Lance Saleme, Priya Cherukuru.

Yashraj Bhatnagar

Eric Chu, Marjorie Banko, MV Kumar,
John Sontag, David B. Stealey

Senior Advisory Commission
Wanda Buck, James Hohenshelt, Grant L.

McCauley, Nancy Toledo, Helen E. Narciso, Judy
Hubbard
Youth Commission
Mitchell Blanda, Kaitlyn Butcher, Mitali Gaidhani,
Rishith Gopisetti, Aarav Gupta, Ahmad Ismail,
Jasmine Kelly-Tanti, Khadeejah Khan, Malia
Martin, Rajvi Khanjan Shroff, Riya Mehta, Hiranya
Parekh, Palak Parikh, Samarth Suresh, Sarah Zuo

As of March 2022
41 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ROSTER AND MANAGEMENT TEAM Executive Management Team
City Manager
Rajeev Batra
City Attorney City Auditor
James Sanchez (Interi
m) Vacant
City Clerk Chief Operating Officer
Hosam Haggag Nadine Nader
Assistant City Manager Chief of Police
Cynthia Bojorquez P
at Nikolai
Fire Chief Director of Human Resources
Ruben Torres Aracely Azevedo
Director of Finance Director of Parks and Recreation
Kenn Lee James Teixeira
Director of Information Technology City Librarian
Gaurav Garg Patty Wong
Chief Electric Utility Officer Director of Water and Sewer Utilities Manuel Pineda Gary Welling
Director of Public Works Director of Community Development Craig Mobeck Andrew Crabtree
42 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CITY ORGANIZATION CHART

CITY ORGANIZATION CHART

Mayor and Council City Clerk (Elected) Chief of Police (Elected) Boards and
Commissions
Finance
Electric Utility
Community
Development
City Clerk’s Office Police
City Departments
Chief Operating Officer
City Auditor City Attorney City Manager
Assistant City Manager Assistant City Manager
Electorate
Fire
Human Resources
Public Works
Parks and Recreation
Library
Water and Sewer
Utilities
Information Technology
43 City of
Santa Clara

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CITY ORGANIZATION CHART City Organization by Department/Division/Program

Mayor and City Council Offices
Mayor and City Council
1611 – City Council Program

City Attorney’s Office
City Attorney
2411 – Program Administration
2412 – Program Litigation

City Clerk’s Office
Elected City Clerk
2314 – Elections
Assistant City Clerk
2311 – Council/Administration Support
2312 – Public Information/Legislation
Records Management
2313 – Political Reform Act

City Auditor’s Office
City Auditor
3352 – City Auditor Administration
3353 – City Auditor Services

City Manager’s Office
City Council Support
1021 – Policy Support for Decision Making
1022 – Intergovernmental Relations and
Advocacy
Leadership and Management Services
1031 – Day-to-Day Operations
1032 – Strategic Planning
1033 – Community Outreach and
Engagement

Community Development Department
Building
5532 – Plan Review and Permit Services
5533 – Field Inspection
5534 – Housing Inspection
Housing and Community Services
5542 – Federal State Grant
5543 – Neighborhood Conservation and
Improvement Program
5544 – Community Development
5545 – Affordable Housing
5546 – Housing Authority
5547 – City Affordable Housing
5548 – Community Development Housing
Successor
Planning
5522 – Development Review
5523 – Advanced Planning
5524 – Historical Preservation
5525 – Code Enforcement
44 --------------,
-------,

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CITY ORGANIZATION CHART Electric Utility Department
Administrative Services
1316 – Administrative Services
Business Services
1311 – Rates and Budget
1324 – Electric Compliance
1358 – Risk Management
Customer Development and Project
Management
1313 – Key Accounts
1317 – Fiber Enterprise
1361 – SVP Engineering
Resource Planning and Engagement
1312 – Public Benefits
1315 – Green Power Program
1319 – SVP Electric Vehicle Program
1325 – Greenhouse Gas Program
1356 – Resource Management
Revenue and Resources
1321 – Revenues and Resources Costs
Utility Operations
1351 – SVP System Support
1362 – Power System Controls
1371 – Communications & Meter Technical
Support
1372 – Substation Maintenance
1376 – Transmission & Distribution
1377 – Generation

Finance Department
Accounting
3322 – General Accounting
Administrative Services
3362 – Citywide Fiscal Planning
Budget
3315 – Budget and Financial Analysis
Municipal Services
3332 – Utility Billing Services
3333 – Revenue Receipting/Cashiering
3334 – Business Certificate
3335 – Field Services
3336 – Administration
3337 – Contact Center/Communication
Purchasing
3341 – Warehouse
3343 – Purchasing
3344 – Mail Services

Fire Department
Administration
7811 – Administration
Community Risk Reduction
7832 – Prevention and Hazardous Materials
7833 – Certified United Program Agency
(CUPA)
Emergency Medical Services
7861 – Emergency Medical Services
Field Operations
7822 – Emergency Response
Office of Emergency Services
7871 – Office of Emergency Services (OES)
Training
7841 – Training – Fire

Human Resources Department
Employee Benefits and Records
2514 – Records – Compensation
2515 – HR Workers’ Compensation & Safety
Recruitment, Classification and Staff
Development
2521 – Selection – Classification
2525 – Recruitment, Staff Development and
Labor Relations

45 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CITY ORGANIZATION CHART Information Technology Department
Contract Services
1931 – Contract Services
Enterprise Services
1911 – Application Services
1912 – IT Web Services
1913 – GIS Services
Infrastructure and Support
1921 – Infrastructure and Support
Telecommunication Services
1941 – IT Telecommunication Services

Library Department
Administration
1221 – Administration
1261 – Donations for Programs
1263 – Literacy Grants
Adult Services
1234 – Read Santa Clara
1241 – Reference and Adult Collections
1244 – Local History
Branch Services
1233 – Mission Library
1235 – Northside Branch
1236 – Bookmobile and Mobile Library
Services
Customer Services
1245 – Customer Services
Facilities
1271 – Facilities
Technical and Technology Services
1251 – Technical Services
1272 – Technology
Youth Services
1231 – Youth Services
1232 – Library – Young Adult

Parks and Recreation Department
Administration
1121 – Administration
1122 – Park Development
1123 – Park Projects
1151 – Teen Activities
1157 – Special Recreation
1171 – Citywide Special Events
Cemetery
0125 – Perpetual Care
0131 – Endowment Care
1162 – Maintenance of Grounds
1163 – Maintenance of Buildings
1164 – Operations
Parks
1132 – Parks
1133 – Pools
1134 – Buildings
1135 – Operations
Recreation
1141 – Health and Wellness
1142 – Recreation – Administration
1143 – Youth Activity Center and Programs
1144 – Senior Center & Therapeutic
Recreation Programs
1145 – Community Recreation Center and
Programs
1146 – Recreation Facilities
1147 – Aquatics
1148 – Sports and Athletics
1149 – Teen Center Activities and Programs
Senior Nutrition Program
1112 – Senior Nutrition Program

46 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CITY ORGANIZATION CHART Police Department
Administrative Services
7742 – Administration
7744 – Professional Stand
7745 – Department Support
7746 – Community Services Police
7747 – 911 Dispatch/Communications
7752 – Police Grants
Communication Acquisitions
7781 – Communication Equipment
Amortization
Field Operations
7722 – General Patrol
7723 – Traffic
7724 – Emergency Response/Temporary
Holding Facility
Investigations
7732 – General Investigation
7733 – Special Enforcement Team
7734 – Records
Special Operations
7761 – Special Operations General
7764 – Special Operations – Specialized
Teams
7765 – Special Operations – Reserves

Department of Public Works
Engineering – Administration
4411 – Administration – General Services
4412 – Administration – Developer Projects
4413 – Administration – Capital
Improvement Projects
Engineering – Design
4441 – Design – General Services
4442 – Design – Developer Projects
4443 – Design – Capital Improvement
Projects
Engineering – Field Services
4461 – Field Services – General Services
4462 – Field Services – Developer Projects
4463 – Field Services – Capital
Improvement Projects
Engineering – Land and Property
Development
4451 – Land and Property Development –
General Services
Department of Public Works
4452 – Land and Property Development –
Development Support
Engineering – Traffic
4431 – Traffic – General Services
4432 – Traffic – Developer Projects
4433 – Traffic – Capital Improvement
Projects
4434 – Traffic Signal Management
4435 – Traffic Striping and Signing
Facility Services
2222 – Maintenance Repair
2223 – Janitorial
2961 – Convention Center Maintenance
District
Fleet Management
2111 – Fleet Acquisitions
2123 – Fleet Operations
Streets
2911 – Street Maintenance
2921 – Storm System Maintenance
2924 – Non-Point Source
2931 – Garbage Collection
2932 – Clean Green Collection
2933 – Clean Up Campaign
2934 – Residential Recycling
2935 – Street Sweeping
2936 – Household Hazardous Waste
2941 – Parking District Maintenance
2951 – Landscape Maintenance
2952 – Street Tree Program
2971 – Traffic Maintenance

47 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CITY ORGANIZATION CHART Water and Sewer Utilities Department
Recycled Water Program
1522 – System Maintenance
1525 – South Bay Water Recycling
Maintenance
Sewer
1511 – System Administration
1512 – System Maintenance
1514 – Operations
1515 – San José-Santa Clara Water
Pollution Control Plant
1516 – Storm Pump Maintenance
Solar Utility
1532 – Solar – System Maintenance
Water Construction, Maintenance, Operations
1422 – Water System Maintenance
1423 – Water Construction
1424 – Water System Operations
Water Engineering
1411 – Administrative Design
1412 – Water Quality
1413 – Water Resources

Non-Departmental
Citywide Programs
3611 – Citywide Programs
Citywide Strategic Programs & Initiatives
3631 – Citywide Strategic Programs &
Initiatives
Stadium Operations
3621 – Stadium – General Administration
3622 – Stadium – Police
3623 – Stadium – Fire
3624 – Stadium – Public Works

48 FY 2022/23 AND F Y 2023/24 PR OPOSED C API TAL IMPR OVEM EN T PR OGR AM BUDGET | BUDGET AND FISCAL POLICIES

BUDGET AND FISCAL POLICIES
We present the relevant policies and practices that define specifically the way the City manages its budget, reserves, interfund loans, investments, and debt with the goal of long-term fiscal sustainability. The City Council reviews and approves budgetary policies as part of the annual budget process. Investment and debt policy statements are referenced in this section; however, reviewed and approved by the City Council under separate cover.

Appropriation Control
The City Council is responsible for approving the appropriation of fiscal resources to cover estimated expenditures for each fiscal year. Expenditures are appropriated in each fund to departments, offices, and agencies for various goods, services, and capital projects described in the budget. The legal appropriation control is established at the department level in each fund. For select funds where expenditures are not allocated to a specific department, the appropriation control is established at the fund level. For capital funds, the appropriation control is at the project level. Transfers of funding between budgetary funds require City Council appropriation and approval. City Council approval is required for a budget amendment during the fiscal year which may include the use of reserves or fund balances, and approval of appropriations of grant monies. Per Article XIII, Section 1305 of the City Charter, appropriations lapse at the end of each fiscal year; therefore, unencumbered funds allocated for specific projects, donations, and grants require City Council appropriation for use in the following fiscal year.

Budgetary transfers between accounts or expenditure category may be done through Finance Department or City Manager’s Office approval as long as they are conducted within the legal appropriation control limit set by the City Council.

Balanced Budget
The City Council considers General Fund budget decisions with long-term implications based on information from the Ten-Year Financial Forecast. One-time sources are used to cover one-time uses. The budget is structurally balanced when forecasted ongoing sources cover ongoing uses. Budgets shall be structurally balanced to the extent possible. Reserves should be considered to balance a budget only in the context of a plan to return to a structural balanced budget.

Budget Monitoring and Reporting
Financial reports on actual performance in relation to budget are prepared by the Finance Department through monthly financial statements. These reports are prepared and presented to the City Council, per City Charter requirements (Section 802) the City Manager shall be required to keep the City Council advised of the financial condition and future needs of the City. City Departments are responsible for reviewing these monthly financial reports and identifying potential budget problems and recommending corrections through budget amendments.

Long Term Financial Forecast
The Finance Department prepares a Ten-Year General Fund Financial Forecast which is incorporated into the budget planning process and presented to the City Council annually. This forecast is updated annually and considers current and future economic conditions, revenue projections, and spending scenarios based on the 49 FY 2022/23 AND F Y 2023/24 PR OPOSED C API TAL IMPR OVEM EN T PR OGR AM BUDGET | BUDGET AND FISCAL POLICIES latest available assumptions. Capital improvement plans are created and published on a five-year basis to provide a long-term plan of the City’s capital funding plan.

Municipal Fees and Charges

User fees are reviewed and adjusted for on an annual basis with the goal of maximizing cost recovery. The City Council may consider and approve any fee that is below 100% cost recovery, requiring a General Fund subsidy if it is in the public’s best interest. User fees are adopted by the City Council annually through the Municipal Fee Schedule. Utility fees and certain other fees and assessments can also be approved separate from the Municipal Fee Schedule. Parks and Recreation fees are established by the Parks and Recreation Director and published in the Activity Guide.

Capital Planning

The City Council reviews and adopts a two-year Capital Improvement Program Budget which includes a five- year capital improvement program. Projects included in the capital improvement program are to be consistent with the City’s General Plan. Per State Government Code Section 65401, the Planning Commission reviews the capital improvement program for conformance to the City’s General Plan and proposes recommended considerations for the City Council. Funding sources are identified for all projects included in the capital improvement plan.

The Capital Improvement Program (CIP) is submitted by City departments and reviewed by the City Manager’s Office, the Finance Department, and the Public Works Department. The review process considers City priorities and identifies the most urgent projects for capital funding by program area, master plans, or needs assessments which identify the most critical projects for repair and replacement.

Department of Public Works staff reviews project estimates and evaluates the current bidding environment.

Project contingency reserves are established based on the type of project and the project estimate type (engineering or preliminary estimates). Operating and maintenance costs are identified for planning purposes when projects are completed and come online.

General Fund Reserves

The City Council allocates available resources to General Fund contingency reserves through various reserves designated for emergency use or restricted future uses. Restrictions are established by policy, or through legally segregated development-related fee reserves collected from users.

• Budget Stabilization Reserve (formerly the Working Capital Reserve) – is used as an allocation for weathering economic downturns, emergency financial crises, or disaster situations. The reserve target is equal to the cost of the City’s General Fund operations for three months (90-day working capital reserve).
• Capital Projects Reserve – is used to support the City’s CIP. The minimum target is $5.0 million with a goal of having sufficient funds to fund capital projects included in the City’s biennial capital budget and five-year CIP.
• Land Sale Reserve – this reserve allocates proceeds from the sale of City-owned land.

50 FY 2022/23 AND F Y 2023/24 PR OPOSED C API TAL IMPR OVEM EN T PR OGR AM BUDGET | BUDGET AND FISCAL POLICIES • Advanced Planning Fee Reserve – this reserve allocates a portion of user fees for the update and amendment of the City’s General Plan. Individual user fees are included and approved under separate cover as part of the Municipal Fee Schedule.

Utility Funds Reserves

The City is responsible for operating and maintaining several utilities, including electric, potable water, recycled water, and sewer. Regular cost of service studies are performed to evaluate rates and charges for each utility with forecasted revenue requirements and projected expenditures. One component of this analysis is the determination of adequate reserve levels to cover shortfalls in operating revenues, address unforeseen operating and capital expenditures, cover day-to-day operating costs during emergency situations, maintain strong bond ratings, and ease the burden on ratepayers associated with large rate increases. The following reserves address these needs:

• Operations and Maintenance Reserve – this reserve is used to cover day-to-day expenses, address unforeseen cost increases or revenue shortfalls, and protect against emergency financial crises or disaster situations. The reserve target is equal to the cost of the individual utility’s operations for three months (90-day working capital reserve). Due to large fluctuations and variability in the energy market, the Electric Utility Operations and Maintenance Reserve has a target ranging from 90 to 180 days of operations. For the Electric Utility, the Operations and Maintenance Reserve, together with the R ate Stabilization Reserve (as described below), comprise the Electric Utility Rate Stabilization Fund established and maintained by the Electric Utility for purposes of its bond indenture. • Infrastructure Reserve – this reserve is used to support each utili ty’s CIP or fund unforeseen and unbudgeted capital costs. The reserve target is equal to an average annual CIP budget, as calculated over a 48-month period of budgeted CIP expenses as presented in the Biennial Capital Improvement Program Budget. At minimum, the target is to reserve 20% of the average annual CIP budget amount.

For the Electric Utility, this reserve is based on an analysis of critical infrastructure, the likelihood for replacement, and the estimated replacement costs, evaluated regularly by SVP. • Rate Stabilization Reserve – this reserve is used to absorb short-term revenue shortfalls and is designed to stabilize utility rates and avoid wide swings in rates charged to utility customers over time. The minimum reserve target is a balance equal to 10% of each utility’s projected current year rate payer revenue. For the Electric Utility, the Rate Stabilization Reserve, together with the Operations and Maintenance Reserve (as described above), comprise the Electric Utility Rate Stabilization Fund established and maintained by the Electric Utility for purposes of its bond indenture. • Special Projects Reserve – this reserve sets aside funds for large or longer-term CIP projects or other special purposes to lessen fluctuations in rates and support long-term planning efforts. While no general target is established for this reserve, the amounts will be established by each utility based on need.

In addition to the reserves cited above, reserves may be established to address specific needs or requirements of an individual utility. This may include required reserves in restricted funds, such as the reserves in the Electric Operating Grant Trust Fund for public benefits, low carbon fuel, and greenhouse gas.

51 FY 2022/23 AND F Y 2023/24 PR OPOSED C API TAL IMPR OVEM EN T PR OGR AM BUDGET | BUDGET AND FISCAL POLICIES Other Reserves

The City may include additional reserves set aside for specific purposes based on legal, policy, or budgetary purposes. Some of these include reserves for historical preservation, pension costs, vehicle or fleet replacement, workers’ compensation costs, or to fund potential future general liability claims against the City.

• Pension Stabilization Reserve – this reserve sets aside funds to address the City’s pension unfunded accrued liability. The targeted annual funding contribution is 1% of the City’s unfunded pension liability.

Interfund Loans and Advances

Interfund loans are loans from one City fund to another City fund for a specific purpose, with a requirement for repayment. Interfund loans should be short-term in nature and shall not be used to solve ongoing structural budget deficits. The department managing the borrowing fund should complete the interfund loan agreement.

The agreement should include the amount requested, loan period, description of the loan, and repayment terms.

Interest shall accrue at the City’s pooled investment rate at the time of the loan approval. A summary of outstanding interfund loans are also included in the City’s Comprehensive Annual Financial Report. In addition, advances from the General Fund have been approved by the City Council that may be paid back by other revenue sources.

Investment Policy

The City undertakes investment related activities that are made with prudence. On an annual basis, the City formalizes these activities in the Investment Policy Statement which is adopted by a resolution of the City Council (https://www.santaclaraca.gov/home/showdocument?id=66753 ). The policy is to invest public funds, including
bond proceeds, reserves and other special City funds, in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the City and conforming to all state and local statutes governing the investment of public funds.

The City of Santa Clara Charter gives the Director of Finance the authority and responsibility to deposit and invest all City funds. It authorizes the Director of Finance to invest the City’s idle cash in allowable investment vehicles with a maximum remaining maturity of five years at the time of purchase. The City Council may grant express authority either specifically or as part of an approved investment program to invest in vehicles with remaining maturity that exceeds the five-year restriction. Authority must be given to the Director of Finance at least three months prior to the investment. California Government Code also allows the City to invest in the same investment vehicles as authorized by the City Council. The Director of Finance establishes written depository and investment policy procedures for the operation of the investment program consistent with the City Investment Policy, establishes a process of independent review by an external auditor, and provides monthly investment reports to the City Council.

Debt Policy

The City believes that debt is an equitable means of financing projects and represents an important source of meeting fiscal responsibilities. The City obtains and maintains long-term debt for large capital improvement projects. The Finance Department manages the City’s debt with prudence, diligence, and attention to prevailing economic conditions and applicable laws. It manages issuance of debt, administers debt proceeds, prepares ongoing disclosure, handles debt and tax compliance, and makes debt service payments. City departments with debt-financed capital programs coordinate with the Finance Department in implementing and handling debt 52 FY 2022/23 AND F Y 2023/24 PR OPOSED C API TAL IMPR OVEM EN T PR OGR AM BUDGET | BUDGET AND FISCAL POLICIES related transactions. Semiannual updates are prepared by the Finance Department on outstanding debt for the City of Santa Clara, its
Agencies, and Corporations. This report is presented as a standard management practice that provides a valuable overview of
the current status of the City’s long-term debt obligations. The current City Council approved debt policy can be found online at: (http://santaclaraca.gov/home/showdocument?id=63748).

Donation Policy
Donations may be offered
in the form of cash, real or personal property. “Designated” donations are donations where the
donor specifies intended use by a particular City department, location, or purpose. “Undesignated” donations are given to the City as a whole, for an unspecified use. Donations of any kind which might be perceived or interpreted as an attempt
to influence actions of the City Council or City Administration will not be accepted. All donations are presented to the City Manager for compliance with the policy. As part of the annual budget process, for anticipated monetary donations, staff will bring forward for Council consideration a balanced appropriation for
revenue and expenditures to facilitate the acceptance of donations throughout the fiscal year.

Donations valued at $100,000 or greater require City Council acceptance and appropriation of funds. Donations
valued less than $100,000 may be accepted with the monetary donations available to departments for expenditure as part of the
adoption of the annual budget. A report of all donations received by the City is presented to City Council as part of the
Monthly Financial Report. The appropriation of anticipated donations can be found in each respective City department and corresponding Source and Use of Funds Statement in this document.

Community Grants Policy
The budget includes an allocati
on of $100,
000 for Community Grants to offset the cost of City fees in support of the Council approved Community Grants Policy. Annually, and subject to availability of funds, the City Council shall establish grant appropriations as part of the approval of the budget. Community grants, subject to availability of funds, shall not exceed $10,000 per
applicant, per year. To receive grant funds, grant applications must be submitted at least 90 days before the planned event/activity being funded, regardless of the form of the grant, and will be evaluated by the City
Manager’s Office on a case-by-case and “first come-f irst served” basis, throughout the fiscal year. Applicants are encouraged to submit their applications at the beginning of the fiscal year, for events or activities occurring at any time during that fiscal year, to maximize opportunity for availability of funds. The City
Manager’s Office shall approve or deny an applicant’s request based upon eligibility criteria, and subject to funding availability as approved by
the City Council through the adoption of the annual budget.

Grants for community ev
ents shall not be provided for waiver of or reimbursement for already discounted permit fees. Grants for attendance at youth state, national, or international competitions or performances shall be limited to costs of registration, hotel, transportation, and food for participants and coaches/chaperones only. Due to short notice to advance to state, national, or international competitions, applicants shall submit an application within one week of advancing
to such competitions. In
all cases, the City reserves the right to reject any and all applications in the event the City Manager’s Office identifies a potential conflict of interest or the appearance of a conflict of interest. Submission of an applic
ation in no way obligates the City to award a grant and the City reserves the right to reject any or
all applications, wholly or in part, at any time, without penalty.

Stadium Authority Policy
The Stadium Authority exists as
a public body, separate and distinct from the City, and is established to provide f
or development and operation of
Levi’s Stadium. It is structured so that the City will not be liable for debts or obligations of the Authority. The governing board duties and the fiscal policies that govern the Stadium Authority are included in the
stand-alone Operating, Debt, and Capital Budget that is adopted by the Stadium Authority Board. This can be found at https://www.santaclaraca.gov/our-city/santa-clara-stadium-authority. This budget 53 FY 2022/23 AND F Y 2023/24 PR OPOSED C API TAL IMPR OVEM EN T PR OGR AM BUDGET | BUDGET AND FISCAL POLICIES reflects the revenues and expenditures related to the support of the Stadium and can also be found in the General Fund Non-Department section of this document titled Stadium Operations.

Policy Development
Staff has established this Budget and Fiscal Policies section in an effort to improve governance, transparency, and establish policies to govern the budget. These policies will be reviewed annually and enhanced as capacity allows.
54 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET AND FISCAL POLICIES

OUTSTANDING LOANS AND ADVANCES

Interfund loans are loans from one City fund to another City fund for a specific purpose, with a requirement for repayment. A detailed listing of outstanding loans and advances is included in the following table:

Receiving Fund Originating Fund
Loan/Advance Details
(Payback Source, Term, Interest
Rate)
Outstanding Amount
(as of June 30, 2021)
Parks and
Recreation Capital
Fund
General Fund
(May 22, 2018, RTC
18-124) Loan for the
Reed Street – Grant
Street Sports Park
Project from the
Land Sale Reserve
This loan bears interest based on
the City’s weighted average
portfolio rate. This loan will be
repaid in annual installments from
Mitigation Fee Act revenue (25%
of the revenue is allocated for loan
repayment) until the loan is paid in
full.

$ 6,618,748*
Cemetery Fund General Fund This advance bears no interest and will be repaid when funds
become available. The advance
is a long-term subsidy of
operations pending mausoleum
project funding in future years
which is expected to generate
additional revenues. It is
anticipated that this will be written-
off by the end of FY 2021/22.

$ 7,111,149
Total Interfund Loans and Advances $ 13,729,897

* This loan amount is understated by $2,143,117. In FY 2020/21, the Parks and Recreation Capital Fund transferred $2,523,654 as a loan repayment based on estimated Mitigation Fee Act (MFA) revenues.

However, based on actual MFA revenue received in FY 2020/21, this loan repayment should have been $380,537. As part of the FY 2020/21 Budgetary Year-End Report, $2,143,117 was returned to the Parks and Recreation Capital Fund to true up the loan repayment.
55 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE

CAPITAL BUDGET GUIDE

The following information is presented to help the reader understand the way the City allocates budgets and accounts for the capital improvement programs (CIP) of the City. Explanations are presented in two categories: Budget Book Details and Fund Accounting.

UNDERSTANDING THE CAPITAL BUDGET

Budget Definition

The budget of the City is a detailed operating and capital plan that identifies estimated costs and program benefits in relation to estimated revenues. The budget is prepared in accordance with Generally Accepted Accounting Principles (GAAP), except encumbrances which are recognized as expenditures when legal contracts or commitments are entered into. The budget for governmental funds has been prepared on a modified accrual basis, recognizing revenue when they are measurable and available to be used to finance expenditures in the fiscal year. Expenditures are recognized when they occur, regardless of when cash is received or disbursed. The budgets for proprietary funds are prepared on a full accrual basis, recognizing revenue and expenditure activity for the fiscal year for which the activity occurred. The budgetary accounting basis and the consolidated annual financial reports include the reconciliation between GAAP modified and/or full accrual accounting for the financial reports and the budgetary basis budget. All of the year -end financial reports are kept on the basis of modified or full accrual accounting. The budget includes the adopted services to be provided during the fiscal year and the associated appropriations to cover the costs of the adopted programs, projects, services and activities. These are funded by the estimated revenue and/or fund bal ance available to finance the adopted service levels.

Budget Process

The budget process is the mechanism through which policy decisions are made, implemented and controlled. The City Charter requires that the City establish a budgetary system for general operations and prohibits expending funds for which there is no legal appropriation. The City is required to adopt an annual budget on or before June 30 for the ensuing fiscal year that begins July 1. The City uses a biennial budget process that alternates between an operating and capital budget. In a year when the biennial capital budget is brought forward, adjustments to the Year 2 operating budget appropriations will also be presented to the City Council. In addition, all capital and operating source and use statements are presented every year in the budget for adoption. This year, the biennial capital budget is being brought forward.

The procedures to establish the capital budget are as follows:

1. During the July/August timeframe, departments review their existing projects and evaluate the potential need for any new projects to be established in the upcoming fiscal year. As part of this review, departments complete a project worksheet, describing the project scope for existing and

56 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE new projects. These are then submitted to the Department of Public Works (DPW) and Finance Department for review in September.

2. In October, the City Manager’s Office, along with the Finance Department, coordinate a citywide presentation to kick -off the budget process. This presentation gives departments a better understanding of what is expected in their final capital submissions as well as project priority criteria.

3. After receiving all project worksheets in September, the DPW begins their review, working with the respective departments to refine details and scope. This allows for DPW to develop accurate budget estimates for each project. These project estimates are submitted back to departments in November.

4. Once Departments receive their project estimates, all capital requests are reviewed to determine which project requests will be submitted for final approval. These requests are reviewed by a Project Review Committee (PRC) , that consists of representatives from the City Manager’s Office, the Finance Department, the DPW, and other selected line departments. These final project requests are due to the Finance Department in November.

5. In December, Departments meet with the PRC to review their respective project requests. Following these meetings, Departments coordinate with the Finance Department to resolve follow-up items or outstanding issues. During this time, Department requests to amend the adopted operating budget are due to the Finance Department for evaluation. The Finance Department meets with the City Manager’s Office in January and February to review all finalized project requests as well as operating requests.

6. At the end of January or beginning of February, there is a City Council operating and strategic priority setting retreat. Any recommendations that come forward during this retreat are incorporated into service level change requests. During this retreat, the Ten -Year General Fund Financial Forecast is also presented to City Council for approval.

7. Following the meetings between the City Manager’s Office and the Finance Department, decisions are finalized based on the items presented, balancing each fund’s budget and incorporating City Council priorities.

8. The City Manager submits to the City Council a proposed capital budget for the two following fiscal years, as well as any operating adjustments for the following fiscal year, commencing July 1.

Submission to City Council is at least thirty-five (35) days prior to the beginning of each fiscal year.

9. Public hearings are conducted to obtain City Councilmembers’ and residents’ comments. Copies of the proposed budget shall be available for inspection by the public in the office of th e City Clerk at least ten days prior to these hearings.

10. The budget is legally enacted through passage of a minute order. 57 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE From the effective date of the budget, the amounts stated therein as proposed expenditures/expenses, become appropriations to the applicable funds. In order to amend the budget during the year, departments must submit a Report to Council, explaining the need for the change and budget implications. Upon review and approval of the City Council, the budget may be amended. For the CIP Budget, the legal level of budgetary control is at the project level.

In addition to the biennial Capital Improvement Program Budget, every other year an operating budget is adopted. For the Operating Budget, the legal level of budgetary control is at the fund and department level. For funds that do not have an associated department, the legal level of budgetary control is at the fund level.

Budget Book Details

The Capital Improvement Program Budget includes a City Manager’s Transmittal Letter that provides an overview of the budget and a discussion of short- and long-term issues facing the City, the alignment of the budget to City Council priorities and strategic initiatives, highlights of capital investments, the General Fund Forecast and fiscal condition of the City, and operating budget adjustments.

The City Profile and Organization Chart section provides basic facts about the City, a detailed roster of elected officials including Boards and Commissions, the City’s executive team, comparison of key revenue and expenditure data to other local cities and the City organization chart.

The Budget and Fiscal Policies section provides detailed policy framework driving the development of the budget, including a glossary and acronym index.

The Budget Summary section provides summary tables and graphs on the City budget. This includes the total City budget across all funds, with adjusting entries reconciling to a total net City budget , as well as revenue and expenditures across all CIP programs.

The Summary of Budgeted Positions by Department details the City’s budgeted positions and reconciles changes throughout the year.

The Statement of Sources and Uses of Funds section details revenues, expenditures and fund balance position including current year estimated revenue and expenditures, two adopted budget years, along with the five-year CIP plan for capital funds. This section is organized by accounting fund type detailed later in this section. All capital and operating funds are presented in the budget.

The Capital Improvement Program presents the capital budget by theme: Administrative Facilities, Community Facilities, Convention Center, Electric Utility, Other Community Facilities, Parks and Trails, Sewer Utility, Solid Waste, Storm Drain, Technology and Equipment, Transportation, and Water and Recycled Water Utilities.

Each CIP theme section contains a narrative, detailing each theme’s objectives, project prioritization, major project highlights and accomplishments, funding sources, operating impacts, and a summary of 58 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE the theme’s unfunded needs. Following the narrative is a summary of all funded project costs within the theme. Additional information including project scope/description for each of these projects is included in the funded project pages. Each funded project page includes the five- year funding breakout by expenditure category, which is described in more detail below. After the funded project pages is a summary of all unfunded projects, which presents the unfunded amount for each fiscal year in the five- year CIP budget.

The Appendices section includes summary and detailed information on the proposed amendments to the adopted operating budget by fund.

Categories of Expenditures

The categories of expenditures for the capital and operating funds include the following:

Construction – I ncludes all costs associated with the building/improving/replacing a structure/infrastructure.

Contingency/Misc. – Includes an allowance for unknown risks associated with a project; these items are generally developed using a standard percentage of the entire project or contract amount and are used to cover any unforeseen items that may come up during construction.

Engineering – I ncludes the design, planning and management of projects involving construction; this can include developing a master plan for infrastructure or refining project scopes to determine accurate construction costs.

Equipment – Consists of any machinery, structures, materials, supplies or systems that are associated or used during the development and construction of a project.

Salaries – Includes regular salaries, overtime pay, vacation pay, holiday, separation payouts and premium pays such as out -of-class pay, night differential pay, hazard pay, evidence tech pay, and paramedic pay. These costs are primarily driven by the number of positions budgeted within the program.

Benefits – Includes Medicare, social security, health allocation, other post-employment benefits (OPEB), and CalPERS retirement costs. Other benefits such as Voluntary Employee Beneficiary Association (VEBA), dental, life insurance, uniform allowance, meal allowance, employee assistance program, auto allowance, mobile phone allowance and professional development are included, if applicable.

Materials/Services/Supplies – Includes all expenditure items that the department has direct control over such as contract costs, supplies, equipment purchases and utility charges.

59 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE Resource and Production – Consists mainly of costs related to the purchasing or ge nerating of electricity, water, or recycled water as well as disposing of solid waste matter and sewage effluent for the respective City utilities.

Interfund Services – Includes two types of expenses. The first type is for charges that one department or fund charges to another for services provided, which includes charges calculated by the Indirect Cost Allocation Plan. The Indirect Cost Allocation Plan includes costs that are typically termed "citywide overhead". Most of these costs are those expenditures which provide support services or oversight to another department or fund citywide. These costs are allocated based on an allocation factor, such as employee count or budgeted expenditures, which is used as the basis for distributing costs to departments or funds receiving the support or benefit.

Examples of such expenditures that are allocated are for services provided by the City Manager's Office, City Attorney's Offic e, Finance and Human Resources. These service costs are allocated to other departments or funds in the Full Cost Allocation Plan. This plan is prepared by a third- party consultant every two or three years and include modest increases between updates. The second type of allocated charge is citywide in nature, funded through the City’s internal service funds. Examples of these costs are c itywide liability insurance costs and information technology costs that are apportioned to departments or funds in the City.

Capital Outlay – Includes small capital expense purchases not budgeted within the Capital Improvement Projects budget. Most individual capital purchases with a cost of less than $5,000 are expensed in this category.

Transfers to Other Funds – Includes all money moving to other funds. Transfers can be between the operating and capital improvement program budget to provide funding for capital projects or between different operating funds.

Debt Service – Funding provided to pay for the City’s Debt Service obligations.

Types of Capital Projects

The Capital Improvement Program Budget categorizes projects as ongoing or distinct.

Ongoing – the project does not have an identifiable completion date and project is needed indefinitely (e.g., maintenance of land or pavement)

Distinct – the project is one- time in nature and funding will be required for a predetermined amount of time (e.g., the building of a structure)

60 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE Strategic Pillars

The following are the strategic pillars established by the City Council to provide a framework for this budget document. In each department section, service level changes and performance and workload measures aligned to one of the Council-approved pillars below:

Enhance Community Engagement and Transparency

Deliver and Enhance High Quality Efficient Services and Infrastructure

Manage Strategically Our Workforce Capacity and Resources

Promote and Enhance Economic , Housing and Transportation Development

Promote Sustainability and Environmental Protection

Enhance Community Sports, Recreational and Art Assets

Ensure Compliance with Measure J and Manage Levi’s Stadium

61 ◄
C

I I I I
FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE Capital Budget Reader’s Guide
The Capital Impr
ovement Project Budget document is organized by theme. As discussed earlier in this section, each theme is comprised of a Theme Overview, followed by a Project Cost Summary , a Funded Project section, and Unfunded Projects Summary. Please see below for an example of a funded project page and an unfunded projects summary page.

FUNDED ANNUAL CREEK TRAIL REHABILITATION PROGRAM

Project Number: 1203 Theme / Category: Parks and Trails Year Initiated: 2018 Project Manager: Vincent Luchessi
Planned Completion Year: Ongoing Department: Public Works Project Type: Ongoing Fund: 533 - Streets and
Highways
Location Various locations along creek trails
Project Description In 2019, the City Council adopted the Bicycle Plan Update 2018. Policy 2.C.1 of the Bicycle Masterplan states: "Develop a trail pavement management plan by 2020 and request funding through the capital budget process to perform necessary pavement maintenance" in order to enhance standard operating practices for bicycle facility maintenance. The trail pavements were inspected by a pavement management consultant in 2019 and a pavement management plan was developed. This project performs pavement preventative maintenance and rehabilitation for the San Tomas Aquino Creek Trail (STACT) and Guadalupe River Trail, including application of seals, removal and replacement of failed asphalt, repair of miscellaneous amenities, and replacing worn-out striping and markings. Preventative maintenance and repair of failed pavements extends the useful life of the City's trail system assets.

Funding Sources General Fund Capital Projects Reserve
(1) (2) (3) (3) (4) (4) (4) (5)
Funding Sources All Prior
Actuals 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 Total Total Sources - $300,000 $360,000 $580,000 - - - $1,240,000 Expenditures All Prior
Actuals 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 Total Construction - $300,000 $300,000 $490,000 - - - $1,090,000 Engineering - - $60,000 $90,000 - - - $150,000
Total Expenditures - $300,000 $360,000 $580,000 - - - $1,240,000 (1) All Prior Actuals reflect the cumulative actual sources and expenditures since project inception. (2) Project sources and expenditures for 2021/22 include carryover from the prior year. (3) Project sources and expenditures for appropriation for Year 1 and Year 2 of the current biennial CIP budget. (4) Project sources and expenditures for appropriation for next three years following the current biennial CIP budget. (5) Total sources and expenditures of all prior year actuals, current and future year budgets.

Strategic Pillar 02 - Deliver and Enhance High Quality Efficient Services and Infrastructure
62 ......
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FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE

UNFUNDED PROJECTS PARKS AND TRAILS
NEW - 321 - Central Park Arbor Center Area Improvements FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Five-Year CIP Total $2,933,800 - - - - $2,933,800
In 2018, the City’s Facility Condition Assessment Report (Kitchell), identified Central Park Arbor Center as “poor” and recommended for renewal. This project will replace the restroom, improve parking lot pathways, lighting, and landscaping. In 2019, the City was awarded a County of Santa Clara All Inclusive Playground Grant, and the Central Park Master Plan identifies the Arbor Center Area as a first year project. The restroom and pavilion parking lot will be used by the playground. Additional improvements around the new facility will be needed. Funds will be needed for restroom, parking lot and pathway improvements. Project will be undertaken as funding becomes available.

Note: Amount under any year reflects the unfunded amount for the project. 63 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE

FUND ACCOUNTING

The accounts of the City are organized and operated on the basis of funds, each of which is considered a separate accounting entity. Government resources are allocated to and accounted for in individual funds based upon the purposes for which the resources are to be spent. A general description of each follows:

Governmental Fund Types

Governmental funds are those through which most governmental functions of the City are financed.

The following are the City's Governmental Fund Types:

General Fund - Used to account for the general operations of the City.

Special Revenue Funds - Used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes. Examples of Special Revenue Funds include the Building Development Services Fund and the Housing Authority Fund.

Debt Service Funds - Used to account for the accumulation of financial resources to be used for the payment of principal and interest on General Government Operating and Capital long-term obligations, which are not accounted for in proprietary funds.

Capital Projects Funds - Used to account for financial resources to be used for the acquisition or construction of General Government major capital facilities.

Proprietary Fund Types

Proprietary funds are used to account for the City's ongoing organizations and activities which are similar to those often found in the private sector. Proprietary Fund Types include Enterprise Funds and Internal Service Funds and are described as follows:

Enterprise Funds - Used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs and expenses, including depreciation, of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Examples of Enterprise Funds include the Electric Utility Fund and the Water Utility Fund.

Internal Service Funds - Used to account for the financing of goods, services or facilities provided by one department or agency to other departments or agencies of the City, or to other governments, on a cost-reimbursement basis. Services provided include vehicle replacement , vehicle maintenance and operations, information technology, communications equipment, public 64 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET GUIDE works capital projects management, special liability insurance claims, workers' compensation insurance and claims, and unemployment insurance. Examples of Internal Service Funds include the Special Liability Fund and Workers' Compensation Fund.

This budget document includes statements of sources and uses for all of the City’s funds, categorized by the type of fund as described above. The financial statements for the capital project funds display the FY 2021/22 Estimate, the FY 2022/23 through FY 2026/27 Proposed, and the Five-Year CIP Total.

The operating budget funds are comprised of the General, Special Revenue, Debt Service, Enterprise, and Internal Service Funds. The financial statements for this group of funds includes the FY 2020/21 actuals, FY 2021/22 Amended Budget, FY 2021/22 Estimate, FY 2022/23 Adopted Budget, and FY 2022/23 Amended Budget. The FY 2021/22 Amended Budget is the adopted budget in addition to any budget amendments that were approved by City Council throughout the fiscal year, while the Estimate column shows what the expected revenue and expenditures will be for FY 2021/22. The FY 2022/23 Amended Budget column reflects amendments recommended to the FY 2022/23 Adopted Budget that are described in the Appendices section of this document.

65 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET CALENDAR

BUDGET CALENDAR

December January February March April May June

Proposed
Capital
Improvement
Project
Review with
the City
Manager’s
Office

Departments
Submit
Critical
Operating
Change
Requests

Statements
of Sources
and Uses
of Funds
Reviewed

Department
Review and
Edit of CIP
Budget
Book
Pages
Finalize
Capital
Improvement
Project
Pages
Joint Study
Session on
FY 2022/23
and FY
2023/24
Biennial CIP
Budget and
Operating
Changes

Department
Meetings
with the
Capital
Project
Review
Committee
Public
Hearing and
Adoption of
FY 2022/23
and FY
2023/24
Biennial CIP
Budget and
Operating
Changes

City
Council
Approval of
Budget
Hearing
Dates,
Ten-Year
Financial
Forecast,
and
Budget
Principles
Statements
of Sources
and Uses
of Funds
Finalized

Joint Study
Session on
FY 2022/23
and FY
2023/24
Biennial CIP
Budget and
Operating
Changes

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FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET PRINCIPLES BUDGET PRINCIPLES FOR FY 2022/23
(Approved by the City Council on February 8, 2022)

1. Make decisions within the context of the City’s Code of Ethics and Values, especially being Fiscally Responsible, Communicative, and Service-Oriented.

2. Consider budget decisions with long- term implications tak ing into account data from the Ten- Year Financial Forecast.

3. To the extent possible, align ongoing expenditures with ongoing revenues to avoid negative impacts on future budgets and maintain the City's high financial management standards.

4. When addressing General Fund shortfalls, use a combination of ongoing and one- time solutions to balance the competing goals of aligning ongoing revenues and expenditures and minimizing t he service delivery impacts to the community.

5. Continue cost control measures until the ongoing General Fund revenues and expenditures are in alignment.

6. Approve an exception to the Council Policy that dictates setting the General Fund Budget Stabilization Reserve at or above 25% of adopted budget expenditures; set the Reserve level at a minimum of 15% of expenditures and address any remaining FY 2022/23 shortfall with the use of the Land Sale Reserve.

7. Focus on projects and services that benefit the community as a whole.

8. Pursue economic development objectives and strategies to foster new public and private investment within Santa Clara, and to create employment opportunities.

9. Balance between compensation adjustments to retain and attract employees and funding for positions.

10. Use one- time unrestricted revenues (e.g., annual General Fund surplus) for one- time uses such as increasing reserves, funding capital or Information Technology projects, paying off debt, and/or paying off unfunded pension or other post-employment benefits liabilities.

11. Inform and communicate clearly and broadly to residents, businesses and employees regarding the City’s fiscal position and budget; schedule hearings to promote active participation in the City Council’s budget deliberations.

12. With limited exceptions, establish fees based on full cost recovery where individuals/businesses rather than the community at -large are benefitting from City services. This preserves limited unrestricted resources for providing services that benefit the community as a whole.

13. Focus on business process redesign in order to improve employee productivity and the quality, flexibility, and cost -effectiveness of service delivery (e.g., streamlining, simplifying, reorganizing functions, and reallocating resources).

14. Explore expanding existing revenue sources and/or adding new revenue sources.

15. Engage employees to contribute new and innovative ideas during the department budget development process.

16. Use the General Plan as a primary long-term fiscal planning tool and link ability to provide City services to development policy decisions.
67 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY

GLOSSARY

The following explanations of glossary and terms are presented to aid in understanding the information included in this document:

Abatement - A complete or partial cancellation of a levy imposed by a government and usually applied to tax levies, special assessments and service charges.

Accounting System - The total structure of records and procedures which discover, record, classify, summarize and report information on the results of operations and the financial position of a government or any of its funds, fund types, balanced account groups, or organizational components.

Accrual Basis of Accounting - A method of accounting that recognizes the financial effect of transactions, events, and interfund activities when they occur, regardless of the timing of related cash flows.

Adopted Budget - The annual City budget as approved by City Council on or before June 30 for the fiscal year beginning July 1. This adopted budget establishes the legal authority for the expenditure of funds. This formal action by the City Council sets the spending path for the year.

Agency Fund – To account for assets held by the City as an agent for individuals, private organizations, other governments, and/or other funds.

Allocation - To divide or share out financial resources or expenditures for a specific purpose to particular funds or departments.

American Recovery and Reinvestment Act (ARRA) - An act established by the federal government in February 2009 whose intent is to create and save jobs, spur economic activity and focus on long term growth through the funding of various projects and initiatives.

Appropriation - A legal authorization granted by the City Council to make expenditures and to incur obligations for specific purposes. For purposes of the Capital Improvement Program (CIP) budget, appropriations are automatically renewed, for the life of the project, unless altered or revoked. For the operating budget, appropriations lapse at the end of the fiscal year to the extent they have not been expended or encumbered.

Appropriations Limit - The California State Constitution limits a city’s appropriations growth rate to two factors:
changes in population, and either the change in California per capita income or the change in the local assessment roll due to non-residential new construction.

Assessed Valuation - A valuation set upon real estate or other property by a government as a basis for levying taxes. In California, the assessed valuation subject to ad valorem tax levy is governed by Proposition 13 and AB8 (1978).

Assets - A probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events. This includes financial resources such as cash, receivables, inventory and plant and equipment, net of depreciation.
68 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Audit - A formal examination of the City’s accounts by an independent audit firm to determine whether the City’s financial statements fairly present the City’s financial position and results of operations in conformity with Generally Accepted Accounting Principles.

Authorized Positions - Regular positions authorized in the budget to be employed during the fiscal year.

Balanced Budget - The budget for a fund is balanced when total budgeted resources, including revenues, transfers in from other funds, and available fund balance from the previous year, meets or exceeds total budgeted uses of resources, including expenses and transfers out to other funds.

Base Budget - The ongoing expense level necessary to maintain service levels previously approved by the City Council.

Basis of Accounting - The timing of recognition, that is, when the effects of transactions or events are recognized for financial reporting or budgeting purposes. The three bases of accounting for governmental agencies are: (1) cash basis (when cash is received or paid), (2) accrual basis (when the underlying transaction or event takes place), and (3) modified accrual basis (revenues are recognized in the accounting period in which they become available and measurable and expenditures are recognized in the accounting period in which the fund liability occurred).

Beginning Fund Balance - The amount of prior year's unappropriated funds used to finance appropriated expenses in the current budget year.

Biennial Budget - A consolidated budget document presented on a biennial basis that includes the City’s Operating Budget and CIP Budget. The Operating and Capital Budgets are presented in alternating years to the City Council for approval.

Bond - A city may raise capital by issuing a written promise to pay a specified sum of money, called the face value or principal amount, at a specified date or dates in the future, together with periodic interest at a specific rate.

Bond Rating - An evaluation of a bond issuer’s credit quality and perceived ability to pay the principal and interest on time and in full. Three agencies regularly review city bonds and generate bond ratings: Moody’s Investors Service, Standard and Poor’s and Fitch Ratings.

Budget - A plan of financial operation embodying an estimate of proposed expenditures for a given period and the estimated financial resources available to finance them. Used without any modifier, the term usually indicates a financial plan for a single fiscal year.

Budget Public Hearing - A public meeting at which any member of the community may appear and be heard regarding any item in the proposed budget as presented by the City Manager to the City Council.

Budget Transmittal Letter - A general discussion of the budget as presented in writing by the City Manager to the City Council. The message contains an explanation of principal budget items and summaries found in the budget.

Budgetary Control - The control or management of a government or enterprise in accordance with an approved budget for the purpose of keeping expenses within the limitations of authorized appropriations. 69 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Capital Asset - Land, buildings, equipment, improvements to buildings, and infras tructure (i.e., roads, bridges and other immovable assets). The City’s policy is to capitalize equipment with a cost exceeding $5,000 and building, improvements and infrastructure with costs exceeding $20,000. A capital asset is defined as an asset with a useful life extending beyond a single accounting period.

Capital Improvement - A permanent addition to the City's assets, including the design, construction or purchase of land, buildings, or facilities, or major renovations of same.

Capital Improvement Program (CIP) Budget - A plan of annual appropriation for capital improvements and various kinds of major facility maintenance. These projects are often multi-year in length, which requires funding beyond the two-year period in the biennial budget.

Capital Outlay - A budget category which includes all equipment having a unit cost of $1,000 or more, and an estimated useful life of over one year or capital improvements costing less than a certain dollar amount. Capital Outlay is budgeted in the operating budget in the Other Operating Expenditure Category.

Certificates of Participation (COPs) - This financing technique provides long-term financing through a lease, installment sale agreement or loan agreement. Certificates of Participation (COPs) allow the public to purchase participation in a stream of lease payments, installment payments or loan payments relating to the acquisition or construction of specific equipment, land or facilities. The lending agreement is secured by a lease on the acquired asset or other assets of the City.

Charges for Services - Fees and charges levied by City departments for services rendered (example: utility charges to customers, recreation program fees, engineering fees, etc.).

Comprehensive Annual Financial Report (CAFR) - The official annual report of the City’s financial condition at the conclusion of the fiscal year, June 30. The report is prepared to conform to Generally Accepted Accounting Principles (GAAP) for governmental units and provides a quantitative look at the operating success, financial health, and compliance of the City’s reporting units.

Community Development Block Grant (CDBG) - Provides eligible metropolitan cities and urban counties with annual direct grants to revitalize neighborhoods; expand affordable housing and economic opportunities; and/or improve community facilities and services, principally to benefit low- and moderate-income persons.

Community Facilities District (CFD) - A special district that can issue debt for the planning, design, acquisition, construction, and/or operation of public facilities, as well as provide public services. Special tax assessments levied by the district are used to repay the debt. A CFD can be formed only if approved by the majority of affected property owners.

Consumer Price Index (CPI) - A statistical measure of a weighted average of prices of a specified set of goods and services purchased by wage earners in urban areas.

Contingency - A budgetary reserve set aside for emergency or unanticipated expenditures, revenue shortfalls, and/or unknown expenditures.

70 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Debt - Obligations of the City to repay, with or without interest, in installments and/or at a later date, some amount of money utilized resulting from the bo rrowing of money or from the purchase of goods and services. Debts of governments include bonds, notes and COPs.

Debt Financing - Issuance of bonds and other debt instruments to finance municipal improvements and services.

Debt Service - Payment of the principal and interest on an obligation resulting from the issuance of bonds, COPs or other debt instruments.

Deficit - An excess of expenditures or expenses over revenue (resources).

Department - An organizational unit comprised of divisions and/or programs. It is the basic unit of service responsibility encompassing a broad mandate of related activities. Department directors generally report directly to the City Manager's Office, for instance, Fire and Finance.

Depreciation - An allocation of the cost of fixed assets (buildings, plant or equipment) over the estimated useful life of the asset.

Designation - A portion of fund equity set aside by Council Action for a specific purpose.

Dissolution Act - Also known as Redevelopment Dissolution Act; on December 29, 2011 the California Supreme Court found the Dissolution Act (ABx1 26) constitutional in the California Redevelopment Association vs.

Matosantos case. The Act continued the suspension and prohibition of most redevelopment activities in effect since late June 2011; dissolved RDAs as of February 1, 2012; created successor agencies and oversight boards; and established roles for the County-Auditor Controller, the Department of Finance and State Controller’s Office in the dissolution process and satisfaction of enforceable obligations of former RDAs.

Division - An organizational unit within a City department. For instance, Fire Field Operations, Fire Community Risk Reduction, and Fire Training.

Encumbrance - Obligations in the form of purchase orders, contracts or salary commitments which are chargeable to an appropriation and for which a part of the appropriation is reserved. They cease to be encumbrances when paid.

Enterprise Fund - Used to account for operations: a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs and expenses, including depreciation or capital replacement, of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

Environmental Impact Report (EIR) - An assessment of the likely influence a project might have on the environment.

Equity - The net assets of a fund (i.e. the assets less the liabilities on a fund balance sheet).

71 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Expenditure - Actual cash disbursements for the cost of goods delivered or services rendered to the City in a Governmental Fund.

Expenditure Object Category (Expenditure Category) - Expenditure categories are a group of similar expenditure objects.

Expense - The cost incurred from providing goods or services related to the City’s operations in Proprietary Funds.

Fee - The payment for direct receipt of a public service by the party who benefits from the service.

Fiscal Year - The time period designated by the City signifying the beginning and ending period for recording financial transactions. Consistent with all cities and counties in the State of California, the City of Santa Clara has specified July 1 to June 30 as its fiscal year.

Franchise - A special privilege granted by a government, permitting the continued use of public property, such as city streets and usually involving the elements of a monopoly or regulation, for example cable TV, gas, refuse, and others.

Full-Time Equivalent - Refers to one full-time equivalent position, which equals 40 hours per week, 52 weeks per year.

Fund - An independent fiscal and accounting entity with a self -balancing set of accounts recording its assets, liabilities, fund equity, revenues and expenditures or expenses and other changes in residual fund equity or balances, segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, limitations or public policy.

Fund Balance - The amount of financial resources immediately available for use. Generally, this represents the difference between unrestricted current assets over current liabilities.

Fund Type - A category into which funds with similar characteristics are grouped. The fund types used in the City budget are General, Special Revenue, Capital Projects, Enterprise, Internal Service and Debt Service funds.

Gas Tax – State tax received from gasoline sales utilized solely for street related purposes, such as new construction, rehabilitation or maintenance.

General Fund - The primary fund of the City used to account for all revenues and expenditures of the City not accounted for in another fund. Examples of departmental operations accounted for in the General Fund include the City Council, Police and Fire Departments, Library, Parks and Recreation, and others.

Generally Accepted Accounting Principles (GAAP) - Uniform minimum standards and guidelines for financial accounting and reporting that govern the form and content of the financial statements of an entity. GAAP encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. GAAP provide a standard by which to measure financial presentations. The primary authoritative body on the application of GAAP to State and local governments is the GASB (Governmental Accounting Standards Board).

72 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Governmental Accounting - The composite activity of analyzing, recording, summarizing, reporting, and interpreting the financial transactions of governments.

Governmental Accounting Standards Board (GASB) - The authoritative accounting and financial reporting standard-setting body for government entities.

Governmental Fund - A fund type to account for tax -supported activities. There are four different types of governmental funds: the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds.

Grant - Contributions of cash or other assets from another government entity to be used or expended for a specific purpose, activity or facility. An example is the Community Development Block Grant given by the federal government.

HOME Program – Federal housing assistance program that provides funds to low- and very low- income families for both rental units and privately-owned dwellings.

Housing and Urban Development (HUD) - The Federal agency whose mission is to increase home ownership, support community development and increase access to affordable housing free from discrimination.

Housing Authority - The City of Santa Clara Housing Authority was established by Resolution 11- 7827 on February 22, 2011 to ensure the provision of safe and sanitary housing for persons of low income.

Indirect Cost Allocation Plan - The City uses an indirect cost allocation plan to ensure that enterprises and certain special revenue supported operations pay for themselves and are not subsidized by City taxpayers.

General Fund supported central services costs such as payroll, accounting, data processing, personnel, city management and facilities maintenance are allocated to those funds benefiting from these services based on statistical data reflecting use of these support services.

Infrastructure - Facilities on which the continuance and growth of a community depend on such as roads, water lines, sewers, public buildings, parks and airports.

Interest and Rent - Interest income on investments and rental income received on property owned by the City.

Interfund Services - Services provided by one fund within the City for the benefit of another fund for which the benefitting fund is charged a fee (e.g., payroll services for the Electric Utility Department).

Interfund Transfers - With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to reimburse a fund that has made expenditures on behalf of another fund.

Less often, a transfer may be made to open or close a fund.

Intergovernmental - Revenue received from other government entities (e.g., grants).

Internal Service Funds - These funds account for special activities and services performed by a designated department for other departments in the City on a cost reimbursement basis.

73 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Legal Debt Limit - Per section 6.07 of the City Charter, bonded indebtedness of the City may not exceed 10% of the total assessed valuation of property within the City, exclusive of any indebtedness incurred for the purpose of water supply, sewers or storm drains.

Levi’s Stadium - The stadium is located at 4900 Marie P. DeBartolo Way, Santa Clara and is the home of the San Francisco 49ers professional football team. It has a permanent seating capacity of approximately 68,500 seats with expansion to approximately 75,000 seats for larger events, such as an NFL Super Bowl. The stadium was built based on the City of Santa Clara approved Measure J, the Santa Clara Stadium Taxpayer Protection and Economic Progress Act, on June 8, 2010.

Levy - An amount of taxes, special assessments or service charges imposed by a government for the support of government activities.

Liability - Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. That is, a financial obligation or claim of financial resources of a specific fund to be liquidated at a future date.

Long-term Debt - Debt with a maturity of more than one year after the date of issue.

Mission - The overriding purpose of the department, division, or program.

Modified Accrual Basis of Accounting - Revenues are recognized in the accounting period in which they become available and measurable; expenditures are recognized in the accounting period in which the fund liability is incurred (if measurable), except for unmatured interest on general long- term debt and certain similar accrued obligations, which should be recognized when due.

Municipal Code - A compilation of City Council approved ordinances currently in effect. The Code defines City policy in various categories, for example, Civil Service rules, traffic regulations, sanitation and health standards, building regulations and planning and zoning regulations.

Object Category - See Expenditure Object Category.

Operating Budget - The portion of the budget that pertains to the City's daily operations and activities engaged in to provide services to the community. The operating budget contains appropriations for such expenditures as personnel (salaries, wages and benefits), supplies and materials, utilities, travel and fuel.

Ordinance - A formal legislative enactment by City Council. It has the full force and effect of law within City boundaries unless pre- empted by a higher form of law (State or federal). An ordinance has a higher legal standing than a resolution. Revenue raising measures, such as the imposition of taxes, spec ial assessments and service charges are some examples of actions that would require the enactment of an ordinance.

Other Financing Sources - Changes in residual fund equity or balances not arising from revenues or expenditures/expenses. Includes governm ental fund general long- term debt proceeds, amounts equal to the present value of minimum lease payments arising from capital leases, proceeds from the sale of general fixed assets and operating transfers in.

74 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Performance Measures - This is a non- financial measurement of activity such as number of meters read, number of bills sent, number of customer service calls handled and response time to emergency calls.

Performance-based budgeting incorporates performance measures into the budget process.

Program - A program is a specific service or activity that falls under departmental divisions. Programs provide for a lower level of detail regarding a Department’s function. For instance, the Traffic Program under the Police Field Operations Division.

Property Tax - An ad valorem (based on value) tax on real property and tangible personal property levied by the local government on the property located within the City’s jurisdiction. Property tax is determined by two factors: the assessed value of the property and the tax rate for the area in which the property is located.

Public Facilities Financing Corporation (PFFC) - The City of Santa Clara Public Facilities Financing Corporation (PFFC) was formed in 1997 for the purpose of issuing COPs to provide financing for the construction of major City facilities. Members of the City Council are also members of the PFFC Board. Debt service on the COPs is secured by lease payments made by the City's General Fund to the PFFC for the use of the constructed facilities for public purposes. In accordance with lease agreements, the PFFC assigns lease payments received from the City to the trustee for payment to the certificate holders.

Redevelopment Dissolution Act - See Dissolution Act.

Reimbursement - Repayments of amounts remitted on behalf of another party, or interfund transactions that constitute reimbursements to a fund for expenditures or expenses initially made from it but properly applied to another fund.

Reserve - An account used to earmark a portion of fund balance to indicate that it is not available for expenditure or legally segregated for a specific future use.

Resolution - A special or temporary legislative order of the City Council/Agency/Authority. If it is not in conflict with any higher form of law, such as a state statute or constitutional provision, it has the full force and effect of law within the boundaries of the City. A resolution requires less legal formality and has a lower legal status than an ordinance.

Revenue - Resources received by the government available for use in supporting services including such items as taxes, fees, permits, licenses, grants and interest.

Risk Management - An organized attempt to protect a government's assets against accidental loss in the most economical method. The City is exposed to various risks of losses related to torts, errors and omissions, general liability, injuries to employees and unemployment claims. Claims, expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated using actuarial methods or other estimating techniques. These losses include an estimate of claims that have been incurred but not reported.

Sales Tax - A tax imposed by the government on retailers at the point of sale for the privilege of selling tangible personal property. It is usually calculated as a percentage of the selling price and collected by the retailer from the consumer. The rate in the City of Santa Clara is 9.0%.

75 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Silicon Valley Power (SVP) - The City’s Electric Utility Department provides electricity to City residents and businesses under the name Silicon Valley Power.

Special Assessment – A compulsory levy made against certain properties to defray part or all of the cost of a specific improvement or service deemed to primarily benefit those properties.

Special Revenue Fund – A fund in which revenue collected is restricted by the City, State or federal government as to how the city might spend its resources.

Sports and Open Space Authority (SOSA) – The City of Santa Clara Sports and Open Space Authority (SOSA) was created by the City Council in 1974 for the acquisition and development of open space within the City. The members of the City Council are also members of SOSA's Board of Directors and, as such, are authorized to transact business and exercise power to purchase, lease or otherwise obtain and dispose of real and personal property, to acquire, construct, maintain, repair, manage and operate real and personal property, including leasing to private operators for commercial purposes, surplus space which is not economical to use for open space planning.

Stadium Authority – The Stadium Authority was established by the City Council in 2011 to provide for the development and operation of Levi’s Stadium. The Stadium Authority’s governing board is the seven members of the City Council. The Stadium Authority will own, develop, construct, operate and maintain the Stadium, and have all powers granted to it by the City. The Stadium Authority is a separate and distinct legal entity, and the City is not liable for the debts or obligations of the Stadium Authority.

Strategic Pillar – The City Council adopted seven focus areas for City operations : 1. Promote and Enhance Economic, Housing and Transportation Development; 2. Deliver and Enhance High Quality Efficient Services and Infrastructure; 3. Enhance Community Sports, Recreational and Arts Assets; 4. Enhance Community Engagement and Transparency; 5. Ensure Compliance with Measure J and Manage Levi's Stadium; 6. Manage Strategically our Workforce Capacity and Resources; and 7. Promote Sustainability and Environmental Protection.

Subsidy – A grant by a government entity to another government entity to pay all or a portion of an activity of the government deemed advantageous to the public.

Successor Agency to the Former Redevelopment Agency of the City of Santa C lara – Pursuant to State legislation ABx1 26, the “Dissolution Act,” the Redevelopment Agency (RDA) of the City of Santa Clara was dissolved effective February 1, 2012. The City has elected to become the Successor Agency for the RDA non- housing functions, responsible for paying off the former Redevelopment Agency’s existing debts, disposing of the former Redevelopment Agency’s properties and assets to help pay off debts, returning revenues to the local government entities that receive property taxes, and winding down the affairs of the former Redevelopment Agency. The City has also elected to retain the former Redevelopment Agency's housing functions, including retaining all of the housing assets, rights, power, duties, obligations and functions previously performed by the Redevelopment Agency in administering its Low and Moderate Income Housing Fund.

Surplus – An excess of revenue (resources) over expenditures or expenses.

76 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | GLOSSARY Taxes – Compulsory charges levied by a government for the purpose of financing services performed for the common benefit. The term does not include specific charges made against particular persons or property for permanent benefits such as special assessments. Neither does the term include charges for services rendered only to those paying such charges as, for example, water service charges.

Ten-Year Financial Plan – A strategic planning document showing the estimated results of operations and capital improvement project requirements over the next ten years. This plan is reviewed and accepted by Council and no appropriations result from that acceptance.

Theme – The capital budget is aligned to twelve categories (Administrative Facilities, Community Facilities, Convention Center, Electric Utility, Other Community Projects, Parks and Trails, Sewer Utility, Solid Waste, Storm Drains, Technology and Equipment, Transportation, and Water and Recycled Water Utilities).

Tourism Improvement District (TID) – The Santa Clara Tourism Improvement District was established in 2004 as a marketing revenue supplement to assist the Santa Clara Convention and Visitors Bureau (CVB) with marketing the City of Santa Clara to hotel and convention center groups and visitors. The activities to be provided to the district will be funded by the levy of assessments.

Transient Occupancy Tax (TOT) – A locally controlled tax imposed on travelers who stay in temporary lodging facilities for stays thirty days or less. The rate in the City of Santa Clara is currently 11.5%.

Trust Fund – Used to account for assets held by the City in a trustee capacity.

User Charges – The payment of a fee for direct receipt of a public service by the party benefiting from the service.

77 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ACRONYMS

ACRONYMS

AB Assembly Bill
ADA American with Disabilities Act
AIPG All Inclusive Playground Grant
AMH Automatic Handling System
ARPA American Rescue Plan Act
ARRA American Recovery and Reinvestment Act
ASAI Average System Availability Index
BAREC Bay Area Research Extension Center
BLS Basic Life Support
BMP Below Market Price
BNPEA Bayshore North Project Enhancement Authority
BSR Budget Stabilization Reserve
CAFR Comprehensive Audited Financial Report
CAHF City Affordable Housing Fund
CalOES State of California Office of Emergency Services CalPERS California Public Employees’ Retirement System
CCTV Closed-Circuit Television
CDBG Community Development Block Grant
CEQA California Environmental Quality Act
CFD Community Facilities District
CIP Capital Improvement Program
CLT Contribution In-Lieu of Tax
CMMS Computerized Maintenance Management System
CNG Compressed Natural Gas
COLA Cost of Living Adjustment
COP Certificates of Participation
COPS Citizens’ Option for Public Safety
CPI Consumer Price Index
CPR/AED Cardiopulmonary Resuscitation/Automated External Defibrillator CPRS California Parks and Recreation Society
CRC Community Recreation Center
78 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ACRONYMS CSMFO California Society of Municipal Finance Officers
CVB Convention-Visitors Bureau
DA Development Agreement
DDA Disposition and Development Agreement
DTSC Department of Toxic Substances Control
DVR Donald Von Raesfeld Power Plant
EEO Equal Employment Opportunity
EIR Environmental Impact Report
EMS Emergency Medical Services
EMT Emergency Medical Technician
EOC Emergency Operations Center
EOL End of Life
EOPS Enforceable Obligation Payment Schedule
ERAF Educational Revenue Augmentation Fund
FEMA Federal Emergency Management Agency
FERC Federal Energy Regulatory Commission
FF&E Furniture, Fixtures and Equipment
FHRMS Finance Human Resources Management System
FMIS Finance Management Information System
FOG Fats, Oils, and Grease
FPPC Fair Political Practices Commission
FTE Full Time Equivalent (Employee)
FTHB First Time Homebuyer
FY Fiscal year
GAAP Generally Accepted Accounting Practices
GASB Governmental Accounting Standards Board
GDP Gross Domestic Product
GFGC General Fund General Contingency
GFOA Government Finance Officers Association
GIS Geographical Information Systems
GPS Global Positioning System
GSI Green Stormwater Infrastructure
GWh Giga Watt Hour
79 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ACRONYMS HA Housing Authority
HIPPA Health Insurance Portability and Accountability Act HMG Hazard Mitigation Grant
HMI Human Mechanical Interface
HOME Home Investment Partnerships Act
HR Human Resources
HUD Housing and Urban Development
HVAC Heating, Ventilation, and Air Conditioning
IBEW International Brotherhood of Electric Workers
ISC/CRC International Swim Center/Community Recreation Center IT Information Technology
JPA Joint Power Agreement
kWh Kilo Watt Hour
LED Light Emitting Diodes
LEED Leadership in Energy and Environmental Design
LF Linear Feet
LLEBG Local Law Enforcement Block Grants Program
LPD Land, Property and Development
m:s minutes: seconds
MCC Motor Control Center
MOU Memorandum of Understanding
MRP Municipal Regional Stormwater National Pollutant Discharge Elimination Permit Muni Municipal
N/A Not Applicable
NCIP Neighborhood Conservation and Improvement Program
NCPA Northern California Power Agency
NEPA National Environmental Policy Act
O&M Operations and Maintenance
OBAG One Bay Area Grant
OSHA Occupational Safety and Health Administration
OTS California Office Traffic Safety
PBC Public Benefits Charge
PCA Property Condition Assessment
80 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ACRONYMS PEMHCA Public Employees’ Medical and Hospital Care Act (California) PEPRA Public Employees’ Pension Reform Act of 2013
PERS Public Employees’ Retirement System
PG&E Pacific Gas and Electric
PLC Programmable Logic Control
POP Problem Oriented Policing
RDA Redevelopment Agency
RMRA Roadway Repair and Accountability Act
RMRP Retiree Medical Reimbursement Program
ROPS Recognized Obligation Payment Schedule
RWF Regional Wastewater Facility
SA Successor Agency
SAIDI System Average Interruption Duration Index
SB Senate Bill
SCADA Supervisory Council and Data Acquisition
SCAT Specialized Crime Action Team
SCPD NSU Santa Clara Police Department - Nuisance Suppression Unit SCSA Santa Clara Stadium Authority
SDPS Storm Drain Pump Station
SFM State Fire Marshal
SFPUC San Francisco Public Utilities Commission
SOSA Sports and Open Space Authority
SRT Special Response Team
STACT San Tomas Aquino Creek Trail
STEM Science, Technology, Engineering and Math
SVACA Silicon Valley Animal Control Authority
SVP Silicon Valley Power (City owned Electric Utility)
SWRCB State Water Resources Control Board
TBRA Tenant-Based Rental Assistance
TDA Transportation Development Act
TDM Traffic Demand Management
TMP Transportation Management Program
TOT Transient Occupancy Tax
81 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | ACRONYMS TPAC Treatment Plant Advisory Committee
UMIS Utility Management Information System
Uncl Unclassified Employee
VLF Vehicle License Fee
VoIP Voice Over Internet Protocol
WiFi Wireless Fidelity Communication Technology
WPCP Water Pollution Control Plant

82 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | SOURCES
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Amended
Change
FY 2021/22 to
FY 2022/23
Change
%
Revenue Sources1:

Property Tax 71,639,000 75,069,000 75,341,000 3,702,000 5.2% Sales Tax 58,183,000 60,959,000 60,173,000 1,990,000 3.4% Transient
Occupancy Tax 9,000,000 12,600,000 12,600,000 3,600,000 40.0% Franchise Tax 4,630,000 4,780,000 4,780,000 150,000 3.2% Gas Tax 5,200,000 5,400,000 5,900,000 700,000 13.5% Other Taxes 1,826,327 1,866,617 1,867,617 41,290 2.3% Planning Fees 6,400,000 6,617,000 6,775,000 375,000 5.9% Other Fees 33,127,922 71,737,111 73,303,513 40,175,591 121.3% Licenses and Permits 11,637,995 12,008,995 11,832,995 195,000 1.7% Fines and Penalties 1,496,135 1,534,089 1,465,000 (31,135) (2.1%) Rents and Leases 6,385,633 8,200,883 7,689,666 1,304,033 20.4% Electric Utility 519,666,171 586,240,686 591,932,383 72,266,212 13.9% Electric Special Revenues 31,839,508 34,475,644 33,382,905 1,543,397 4.8% Water Utility 47,500,000 46,312,500 46,312,500 (1,187,500) (2.5%) Sewer Utility 42,976,233 42,997,704 40,518,345 (2,457,888) (5.7%) Water Recycling Utility 5,200,000 5,200,000 5,200,000 0 0.0% Solid Waste Services 33,135,000 35,579,000 36,935,092 3,800,092 11.5% Storm Drain Fees 2,908,000 2,944,000 2,908,000 0 0.0% Miscellaneous Charges for Services 5,449,367 6,279,342 6,498,387 1,049,020 19.3% Grant Revenue 15,069,719 989,097 989,097 (14,080,622) (93.4%) Housing Related 2,025,391 2,025,016 1,623,337 (402,054) (19.9%) Other Agencies 42,128,685 4,632,112 5,221,998 (36,906,687) (87.6%) Other Revenues 12,781,813 16,920,287 16,920,287 4,138,474 32.4% State Revenues 162,000 162,000 160,000 (2,000) (1.2%) Traffic Mitigation 1,531,500 1,531,500 1,000,000 (531,500) (34.7%) Interest Income 10,010,228 10,199,344 9,810,660 (199,568) (2.0%) Reimbursements 5,614,872 5,878,752 6,294,102 679,230 12.1% Developer Contributions 38,861,733 6,767,701 20,021,442 (18,840,291) (48.5%) Sale of Land or Property 100,000 80,000 80,000 (20,000) (20.0%) Bond Proceeds 18,588,216 0 0 (18,588,216) (100.0%) Interdepartmental Revenue 84,471,722 87,069,620 88,977,303 4,505,581 5.3% Transfers From 106,559,744 44,563,785 47,236,179 (59,323,565) (55.7%) Gross Revenue 1,236,105,914 1,201,620,785 1,223,749,808 (12,356,106) (1.0%) Less Transfers In and Interfund
Revenues2
(191,031,466) (131,633,405) (136,213,482) 54,817,984 (28.7%) Net Revenue 1,045,074,448 1,069,987,380 1,087,536,326 42,461,878 4.1% Capital Improvement Program
Carryover
143,343,514 0 0 (143,343,514) (100.0%)
Use of Reserves 28,907,185 (38,070,524) 37,299,568 8,392,383 100.0% Total Net Sources3
1,217,325,147 1,031,916,856 1,124,835,894 (92,489,253) (7.6%)

83 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | USES
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Amended
Change
FY 2021/22 to
FY 2022/23
Change
%
Expenditures1:

Operating Budget:

City Council 829,205 859,377 861,105 31,900 3.8%
City Attorney's Office 3,097,380 3,222,887 3,202,735 105,355 3.4% City Clerk's Office 1,470,231 1,871,218 2,076,112 605,881 41.2% City Auditor 1,075,970 1,250,526 1,224,141 148,171 13.8% City Manager's Office 5,442,069 5,695,535 5,755,321 313,252 5.8% Community Development Department 23,938,049 23,217,718 23,680,861 (257,188) (1.1%) Electric Utility 529,959,140 614,266,787 675,885,991 145,926,851 27.5% Finance Department 16,363,472 17,207,791 17,820,990 1,457,518 8.9% Fire Department 60,581,403 62,981,272 62,184,871 1,603,468 2.6% Human Resources 4,133,810 4,313,246 4,508,710 374,900 9.1% Information Technology 12,284,229 12,272,415 12,958,301 674,072 5.5% Library Department 10,764,727 11,159,488 11,130,451 365,724 3.4% Parks & Recreation 22,940,877 24,003,461 23,743,141 802,264 3.5% Police Department 80,454,471 84,155,066 85,444,381 4,989,910 6.2% Public Works 79,441,436 82,480,815 83,367,913 3,926,477 4.9% Water and Sewer Utility Dept 95,628,494 119,239,036 86,940,128 (8,688,366) (9.1%) Non-Departmental4 61,939,938 34,543,443 38,660,265 (23,279,673) (37.6%) Other Agency 5,420 5,420 5,420 0 0.0%
Internal Services 15,358,000 13,915,290 15,793,000 435,000 2.8% Debt Service 39,286,574 19,842,227 19,841,227 (19,445,347) (49.5%) Gross Operating Budget 1,064,994,895 1,136,503,018 1,175,085,064 110,090,169 10.3% Less Transfers Out and Interfund
Expenses2
(178,378,596) (205,298,512) (200,317,482) (21,938,886) 12.3% Net Operating Budget 886,616,299 931,204,506 974,767,582 88,151,283 9.9% Capital Improvement Program Budget:

Total Capital Improvement Program 333,428,673 96,689,893 147,580,629 (185,848,044) (55.7%) Public Works Management Services 3,962,714 4,022,457 3,941,683 (21,031) (0.5%) Less Transfers Out (6,682,539) 0 (1,454,000) 5,228,539 (78.2%) Total Capital Improvement Program
Budget3 330,708,848 100,712,350 150,068,312 (180,640,536) (54.6%) Total Net Uses 1,217,325,147 1,031,916,856 1,124,835,894 (92,489,253) (7.6%) 1 Excludes Stadium Authority operating budget
2 Excludes internal services fund operating budget, non-City Convention Center activities, and all transfers 3 Excludes Capital Improvement Program Carryover in FY 2022/23Adopted and Amended budgets; included in FY 2021/22 Adopted Budget 4 Includes Convention Center operating budget

84 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | REVENUE SUMMARY
Fund Type
FY 2020/21
Actual
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Amended
Year-on-Year
Change
Change
%
General Fund
001 General Fund 240,695,681 256,944,069 242,076,684 242,058,385 (14,885,684) (5.8%) Total General Fund 240,695,681 256,944,069 242,076,684 242,058,385 (14,867,385) (5.8%) S
pecial Revenue Funds
463 Bridge Maintenance District #2 Fund 93,197 80,000 80,000 80,000 0 0.0% 155 Building Development Services Fund 0 31,643,097 14,112,000 14,112,000 (17,531,097) (55.4%) 220 Building Special Programs and Training
Fund
69,376 63,395 63,395 63,395 0 0.0%
165 City Affordable Housing Fund 3,411,072 657,000 657,000 682,000 25,000 3.8% 027 Community Facilities District No. 2019-1
(Lawrence Station) Fund
195,280 376,327 387,617 387,617 11,290 3.0%
026 Convention Center Maintenance District
Fund
1,707,470 1,698,119 1,878,119 1,878,119 180,000 10.6%
124 Developer Traffic Payments Fund 778,210 0 0 0 0 0.0% 025 Downtown Park
ing Maintenance Fund 163,788 14,200 14,200 14,200 0 0.0% 077 Endowment Care Fund 222,753 118,000 118,000 118,000 0 0.0% 144 Engineering Operating Grant Trust Fund 216,287 0 0 0 0 0.0% 079 Expendable Trust Fund 811,461 0 0 0 0 0.0%
178 Fire Operating Grant Trust Fund 61,634 0 0 32,745 32,745 0.0% 121 Gas Tax Fund 5,158,518 2,900,000 3,100,000 3,500,000 600,000 20.7% 562 Housing and Urban Development Fund 3,072,574 1,957,103 1,865,000 1,810,000 (147,103) (7.5%) 164 Housing Authority Fund 356,607 261,000 261,000 280,000 19,000 7.3% 169 Housing Successor Agency Fund 13,202,257 350,000 350,000 350,000 0 0.0% 112 Library Operating Grant Trust Fund 90,058 0 0 0 0 0.0% 101 Other City Departments Operating Grant
Trust Fund
4,927,668 0 0 0 0 0.0%
111 Parks and Recreation Operating Grant
Trust Fund
357,132 147,984 147,984 124,769 (23,215) (15.7%)
076 Perpetual Care Fund 550 500 500 500 0 0.0%
177 Police Operat
ing Grant Trust Fund 732,142 0 0 0 0 0.0%
157 Prefunded Plan Review Fund 411,861 0 0 0 0 0.0%
067 Public Donations Fund 92,188 0 0 0 0 0.0%
221 Public, Educational, and Governmental
Fee Fund
234,050 200,000 200,000 200,000 0 0.0%
122 Road Maintenance and Rehabilitation
(SB1) Fund
2,400,529 2,400,000 2,400,000 2,500,000 100,000 4.2%
123 Traffic Mitigation Fund 3,420,049 1,681,500 1,681,500 1,150,000 (531,500) (31.6%) Total Spe
cial Revenue Funds 42,186,711 44,548,225 27,316,315 27,283,345 (17,264,880) (38.8%) Enterprise Funds
093 Cemetery Fund 1,444,562 1,478,500 1,498,500 1,498,500 20,000 1.4% 860 Convention Center Enterprise Fund 650,606 8,352,205 13,603,635 13,603,635 5,251,430 62.9%

85 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | REVENUE SUMMARY
Fund Type
FY 2020/21
Actual
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Amended
Year-on-Year
Change
Change
%
Enterprise Funds
191 Electric Operating Grant Trust Fund 35,708,758 31,883,769 34,522,118 33,429,379 1,545,610 4.8% 091 Electric Utility Fund 497,904,492 530,687,026 594,686,986 589,799,417 59,112,391 11.1% 094 Sewer Utility Fund 65,035,938 39,756,481 40,459,345 40,459,345 702,864 1.8% 096 Solid Waste Fund 27,585,212 33,643,600 36,087,600 37,280,456 3,636,856 10.8% 097 Water Recycling Fund 5,966,922 5,703,831 5,708,446 5,708,446 4,615 0.1% 092 Water Utility Fund 52,420,557 49,489,630 48,358,520 48,358,520 (1,131,110) (2.3%) Total Enterprise Funds 686,717,047 700,995,042 774,925,150 770,137,698 69,142,656 9.9% Internal Service Funds
048 Communication Acquisitions Fund 536,853 584,334 606,984 829,358 245,024 41.9% 053 Fleet Operations Fund 4,728,268 5,116,150 5,277,356 5,503,082 386,932 7.6% 045 Information Technology Services Fund 11,674,254 12,084,229 12,072,415 12,259,626 175,397 1.5% 044 Public Works Capital Projects
Management Fund
3,821,799 3,962,714 4,114,234 3,941,683 (21,031) (0.5%) 082 Special Liability Insurance Fund 7,424,082 12,343,000 7,930,290 9,554,000 (2,789,000) (22.6%) 087 Unemployment Insurance Fund 667,577 550,000 150,000 0 (550,000) (100.0%) 050 Vehicle Replacement Fund 3,404,618 4,582,911 4,012,324 4,152,585 (430,326) (9.4%) 081 Workers' Compensation Fund 5,900,488 5,665,000 5,835,000 5,835,000 170,000 3.0% Total Internal Service Funds 38,157,939 44,888,338 39,998,603 42,075,334 (2,813,004) (6.3%) Capital Improvement Program Funds
593 Cemetery Capital Fund 300,000 8,409 0 9,225 816 9.7% 865 Convention Center Capital Fund 3,857,408 0 0 0 0 0.0% 591 Electric Utility Capital Fund 36,655,865 44,380,567 30,397,677 93,761,481 49,380,914 111.3% 536 Fire Department Capital Fund 290,796 837,110 251,602 588,153 (248,957) (29.7%) 539 General Government Capital Fund 4,098,669 1,555,000 912,104 425,000 (1,130,000) (72.7%) 537 Library Department Capital Fund 128,058 7,872 0 281,831 273,959 3480.2% 532 Parks and Recreation Capital Fund 4,398,469 16,210,410 200,000 500,000 (15,710,410) (96.9%) 542 Patrick Henry Drive Infrastructure
Improvement Fund
0 0 0 69,205 69,205 0.0%
538 Public Buildings Capital Fund 1,968,801 397,953 112,231 1,189,532 791,579 198.9% 597 Recycled Water Capital Fund 550,000 50,000 50,000 0 (50,000) (100.0%) 540 Related Santa Clara Developer Fund 1,324,509 1,652,839 2,501,585 2,902,465 1,249,626 75.6% 594 Sewer Utility Capital Fund 46,796,471 28,380,716 40,757,915 4,364,913 (24,015,803) (84.6%) 596 Solid Waste Capital Fund 753,500 439,700 668,833 743,000 303,300 69.0% 535 Storm Drain Capital Fund 5,978,342 2,046,169 1,817,582 2,417,432 371,263 18.1% 534 Street Lighting Capital Fund 168,402 0 75,000 71,455 71,455 0.0% 533 Streets and Highways Capital Fund 22,399,526 45,998,780 13,357,027 15,029,877 (30,968,903) (67.3%)

86 FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | REVENUE SUMMARY
Fund Type
FY 2020/21
Actual
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Amended
Year-on-Year
Change
Change
%
Capital Improvement Program Funds
541 Tasman East Infrastructure
Improvement Fund
175,757 1,192,891 0 0 (1,192,891) (100.0%)
592 Water Utility Capital Fund 4,824,312 6,285,000 6,360,000 0 (6,285,000) (100.0%) Total Capital Improvement Program Funds 134,668,885 149,443,416 97,461,556 122,353,569 (27,089,847) (18. 1%) Other Agency Funds
801 Sports and Open Space Authority Fund 267 250 250 250 0 0.0% Total Other Agency Funds 267 250 250 250 0 0.0%
Debt Serv
ice Funds
491 Electric Utility 13,736,728 16,305,884 16,548,917 16,548,917 243,033 1.5% 431 Public Facilities Financing Corporation
Fund
2,500,647 2,503,439 1,404,275 1,403,275 (1,100,164) (43.9%) 494 Sewer Utility 1,432,799 20,477,251 1,889,035 1,889,035 (18,588,216) ( 90.8%) Total Debt Service Funds 17,670,174 39,286,574 19,842,227 19,841,227 (19,445,347) ( 49.5%) Grand Total Revenues 1,160,096,704 1,236,105,914 1,201,620,785 1,223,749,808 (12,356,106) (1.0%)

87 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | EXPENDITURES SUMMARY
Fund Type
FY 2020/21
Actual
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Amended
Year-on-Year
Change
Change
%
General Fund
001 General Fund 266,200,689 286,025,931 264,636,922 269,591,355 (16,434,576) (5.7%) Total General Fund 266,200,689 286,025,931 264,636,922 269,591,355 (16,434,576) (5.7%) Speci
al Revenue Funds
463 Bridge Maintenance District #2 Fund 140,000 80,000 80,000 80,000 0 0.0% 155 Building Development Services Fund 0 12,428,158 12,581,772 13,048,582 620,424 5.0% 220 Building Special Programs and Training
Fund
95,147 44,995 44,995 61,765 16,770 37.3%
165 City Affordable Housing Fund 818,044 1,431,111 1,447,378 1,464,431 33,320 2.3% 027 Community Facilities District No. 2019-1
(Lawrence Station) Fund
7,724 286,798 350,507 350,507 63,709 22.2%
026 Convention Center Maintenance District
Fund
1,245,462 1,698,119 1,878,119 1,878,119 180,000 10.6%
025 Downtown Parking Maintenance Fund 123,133 138,163 142,308 137,521 (642) (0.5%) 077 Endowment Care Fund 25,537 28,000 28,000 28, 000 0 0.0% 144 Engineering Operating Grant Trust
Fund
189,586 0 0 0 0 0.0%
079 Expendable Trust Fund 352,747 0 0 0 0 0.0%
178 Fire Operating Grant Trust Fund 218,638 0 0 36,019 36,019 0.0% 121 G
as Tax Fund 3,610,356 2,482,144 3,509,479 2,985,000 502,856 20.3% 562 Housing and Urban Development Fund 3,202,131 3,684,839 2,575,398 2,379,814 (1,305,025) (35.4%) 164 Housing Authority Fund 127,716 363,099 368,411 380,363 17,264 4.8% 169 Housing Successor Agency Fund 12,232,724 915,640 932,072 947,899 32,259 3.5% 112 Library Oper
ating Grant Trust Fund 108,841 0 0 0 0 0.0%
101 Other City Departments Operating Grant
Trust Fund
4,334,293 0 0 0 0 0.0%
111 Parks and Recreation Operating Grant
Trust Fund
250,358 147,984 147,984 124,769 (23,215) (15.7%)
076 Perpetual Care Fund 550 500 500 500 0 0.0%
177 Police Operating Grant Trust Fund 825,767 0 0 0 0 0.0% 157 Prefunded P
lan Review Fund 1,004,507 0 0 0 0 0.0%
067 Public Donations Fund 26,343 0 0 0 0 0.0%
221 Public, Educational, and Governmental
Fee Fund
43,311 200,000 200,000 200,000 0 0.0%
122 Road Maintenance and Rehabilitation
(SB1) Fund
2,100,000 2,100,000 2,100,000 2,500,000 400,000 19.0%
123 Traffic Mitigation Fund 2,003,500 2,184,927 1,815,000 850,000 (1,334,927) (61.1%) Total Special Revenue Funds 33,086,415 28,214,477 28, 201, 923 27,453,289 (761,188) (2.7%) Enterprise Funds
093 Cemetery Fund 1,335,730 1,481,057 1,535,529 1,540,618 59,561 4.0% 860 Convention Center Enterprise Fund 3,434,773 9,581,861 14,428,381 14,373,644 4,791,783 50.0%

88 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | EXPENDITURES SUMMARY
Fund Type
F Y 2020/21
Actual
F Y 2021/22
Adopted
F Y 2022/23
Adopted
F Y 2022/23
Amended
Year-on-
Year Change
Change
%
Enterprise Funds
191 Electric Operating Grant Trust Fund 22,496,547 32,910,111 34,522,118 33,549,786 639,675 1.9% 091 Electric Utility Fund 445,363,882 497,049,029 579,744,669 642,336,205 145,287, 176 29.2% 094 Sewer Utility Fund 61,080,985 36,727,359 62,519,070 34,174,214 (2, 553,145) (7.0%) 096 Solid Waste Fund 27,880,286 33,600,296 35,092,680 37,124,239 3,523, 943 10.5% 097 Water Recycling Fund 6,457,368 5,759,582 5,805,348 5,729,413 (30, 169) (0.5%) 092 Water Utility Fund 48,552,069 53,141,553 50,914,618 47,036,501 (6, 105,052) (11.5%) Total Enterprise Funds 616,601,640 670,250,848 784,562,413 815,864,620 145,613, 772 21.7% Internal Service Funds
048 Communication Acquisitions Fund 338,465 584,334 606,984 829,358 245,024 41.9% 053 Fleet Operations Fund 4,342,142 5,161,720 5,330,229 5,561,850 400,130 7.8% 045 Information Technology Services Fund 11,818,419 12,084,229 12,072,415 12,758,301 674,072 5.6% 044 Public Works Capital Projects
Management Fund
3,542,182 3,962,713 4,114,234 3,941,683 (21,030) (0. 5%) 082 Special Liability Insurance Fund 12,225,659 9,143,000 7,930,290 9,554,000 411,000 4.5% 087 Unemployment Insurance Fund 757,947 550,000 150,000 150,000 (400,000) ( 72.7%) 050 Vehicle Replacement Fund 2,658,511 4,060,649 3,214,961 3,444,961 (615, 688) (15.2%) 081 Workers' Compensation Fund 4,011,178 5,665,000 5,835,000 6,089,000 424,000 7.5% Total Internal Service Funds 39,694,503 41,211,645 39,254,113 42,329,153 1,117, 508 2.7% Capital Improvement Program Funds
593 Cemetery Capital Fund 0 308,409 0 9,225 (299,184) (97.0% ) 865 Convention Center Capital Fund 711,167 3,500,000 0 0 (3,500,000) (100.0%) 591 Electric Utility Capital Fund 44,468,742 126,557,162 30,397,677 93,761,481 (32, 795,681) (25.9%) 536 Fire Department Capital Fund 259,676 1,727,836 251,602 588,153 (1,139,683) (66.0%) 539 General Government Capital Fund 7,065,193 11,041,114 912,104 425,000 (10,616,114) (96.2%) 537 Library Department Capital Fund 132,677 237,973 0 281,831 43,858 18.4% 532 Parks and Recreation Capital Fund 9,380,988 25,007,151 3,892,990 4,626,797 (20, 380,354) (81.5%) 542 Patrick Henry Drive Infrastructure
Improvement Fund
0 0 0 69,205 69,205 0.0%
538 Public Buildings Capital Fund 4,414,682 3,974,554 112,231 1,189,532 (2,785, 022) (70.1%) 597 Recycled Water Capital Fund 2,063 50,000 50,000 50,000 0 0.0% 540 Related Santa Clara Developer Fund 1,574,492 1,652,839 2,501,585 2,902, 465 1,249,626 75.6% 594 Sewer Utility Capital Fund 38,384,989 69,106,996 40,328,667 19,815,641 (49, 291,355) (71.3%) 596 Solid Waste Capital Fund 515,218 623,700 654,885 743,000 119,300 19.1% 535 Storm Drain Capital Fund 3,386,813 5,677,705 1,818,582 2,417,432 (3, 260,273) (57.4%) 534 Street Lighting Capital Fund 180,707 5,949,505 75,000 71,455 (5,878,050) (98.8%) 533 Streets and Highways Capital Fund 20,676,073 74,291,929 13,357,027 15,029,877 (59, 262,052) (79.8%)

89 FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | BUDGET SUMMARY BUDGET SUMMARY | EXPENDITURES SUMMARY
Fund Type
F Y 2020/21
Actual
F Y 2021/22
Adopted
F Y 2022/23
Adopted
F Y 2022/23
Amended
Year-on-Year
Change
Change
%
Capital Improvement Program Funds
541 Tasman East Infrastructure
Improvement Fund
170,921 199,514 0 2,876,218 2,676,704 1,341.6%
592 Water Utility Capital Fund 8,292,571 7,485,000 6,360,000 6,665,000 (820,000) (11.0%) 139,616,972 337,391,387 100,712,350 151,522,312 (185,869,075) (55.1% ) Other Agency Funds
801 Sports and Open Space Authority
Fund
9,989 5,420 5,420 5,420 0 0.0%
Total Other Agency Funds 9,989 5,420 5,420 5,420 0 0.0% Debt Service Funds
491 Electric Utility 11,801,951 16,305,884 16,548,917 16,548,917 243,033 1.5% 431 Public Facilities Financing
Corporation Fund
2,502,457 2,503,439 1,404,275 1,403,275 (1,100,164) (43.9%) 494 Sewer Utility 1,180,215 20,477,251 1,889,035 1,889,035 (18,588,216) (90.8%) Total Debt Service Funds 15,484,623 39,286,574 19,842,227 19,841,227 (19,445,347) (49.5% ) Grand Total Expenditures 1,110,694,831 1,402,386,282 1,237,215,368 1,326,607,376 (75,778,906) (5.4% ) Total Capital Improvement Program
Funds
90 FY 202 2/2 3 AND FY 202 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSFER SCHEDULE BUDGET SUMMARY | TRANSFER SCHEDULE
Fund In Out
From General Fund (001) 10,254,285
To Cemetery C
apital Fund (593) 9,225
To Cemetery Fund (093) 870,000
To Convention Center Maintenance District Fund (026) 842,700 To Fire Department Capital Fund (536) 588,153
To General Government Capital Fund (539) 89,283
To Library Department Capital Fund (537) 281,831
To Parks and Recreation Capital Fund (532) 200,000
To Parks and Recreation Operating Grant Trust Fund (111) 3,445 To Public Buildings Capital Fund (538) 1,189,532
To Public Facilities Financing Corporation Fund (431) 1,402,275 To Solid Waste (096) 35,364
To Storm Drain Capital Fund (535) 963,432
To Streets and Highways Capital Fund (533) 3,779,045
Subtotal Transfer from General Fund 10,254,285 10,254,285 From Vehicle Replacement Fund (050) 960,000
To General Fund (001) 960,000
Subtotal Transfer from Vehicle Replacement Fund 960,000 960,000 From Perpetual Care Fund (076) 500
To Cemetery Fund (093) 500
Subtotal Transfer from Perpetual Care Fund 500 500
From Endowment Care Fund (077) 28,000
To Cemetery Fund (093) 28,000
Subtotal Transfer from Endowment Care Fund 28,000 28,000 From Electric Utility Fund (091) 77,510,308
To General Fund (001) 986,573
To Electric Debt Service Fund (491) 16,548,917
To Street Lighting Capital Fund (534) 71,455
To General Government Capital Fund (539) 204,323
To Electric Utility Capital Fund (591) 59,699,040
Subtotal Transfer from Electric Utility Fund 77,510,308 77,510,308 From Water Utility Fund (092) 239,436
To Electric Utility Capital Fund (539) 120,000
To General Government Capital Fund (539) 119,436
Subtotal Transfer from Water Utility Fund 239,436 239,436 Amended FY 2022/23
Transfer

91 FY 202 2/2 3 AND FY 202 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSFER SCHEDULE BUDGET SUMMARY | TRANSFER SCHEDULE
Fund In Out
From Cemetery Fund (093) 822
To General Government Capital Fund (539) 822
Subtotal Transfer from Cemetery Fund 822 822
From Sewer Utility Fund (094) 5,238,226
To Sewer Utility Debt Service Fund (494) 1,889,035
To General Government Capital Fund (539) 4,278
To Sewer Utility Capital Fund (594) 3,344,913
Subtotal Transfer from Sewer Utility Fund 5,238,226 5,238,226 From Solid
Waste Fund (096) 498,121
To Solid Waste Capital Fund (596) 493,000
To General Government Capital Fund (539) 5,121
Subtotal Transfer from Solid Waste Fund 498,121 498,121 From Gas Tax Fund (121) 2,985,000
To Streets and Highways Capital Fund (533) 2,985,000
Subtotal Transfer from Gas Tax Fund 2,985,000 2,985,000 From Road Maintenance and Rehabilitation (SB1) Fund (122) 2,500,000 To Streets and Highways Capital Fund (533) 2,500,000
Subtotal Transfer from Road Maintenance and Rehabilitation (SB1) Fund 2,500,000 2,500,000 From Traffic Mitigation Fund (123) 850,000
To Streets and Highways Capital Fund (533) 850,000
Subtotal Transfer from Traffic Mitigation Fund 850,000 850,000 From Building Development Services Fund (155) 187,773
To General Fund (001) 179,036
To General Government Capital Fund (539) 1,737
To Building Special Programs & Training Fund (220) 7,000 Subtotal Transfer from Building Development Services Fund 187,773 187,773 Amended FY 2022/23
Transfer

92 FY 202 2/2 3 AND FY 202 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TRANSFER SCHEDULE BUDGET SUMMARY | TRANSFER SCHEDULE
Fund In Out
From Electric Operating Grant Trust Fund (191) 11,243,020 To Vehicle Replacement Fund (050) 400,000
To Electri
c Utility Fund (091) 7,410,351
To Electric Utility Capital Fund (591) 2,732,669
To Parks and Recreation Capital Fund (532) 300,000
To Streets and Highways Capital Fund (533) 400,000
Subtotal Transfer from Electric Operating Grant Trust Fund 11,243,020 11,243,020 From Building Special Programs and Training Fund (220) 1,765 To General Fund (001) 1,765
Subtotal Transfer from Building Special Programs and Training Fund 1,765 1,765 From Bridge Maintenance District #2 Fund (463) 80,000
To Streets and Highways Capital Fund (533) 80,000
Subtotal Transfer from Bridge Maintenance District #2 Fund 80,000 80,000 From Storm Drain Capital Fund (535) 1,454,000
To General Fund (001) 1,454,000
Subtotal Transfer from Storm Drain Fund 1,454,000 1,454,000 Total Transfers 114,031,256 114,031,256
Amended FY 2022/23
Transfer

93 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY THEME

FY 2022/23
Proposed
FY 2023/24
Proposed
FY 2024/25
CIP
FY 2025/26
CIP
FY 2026/27
CIP
Five-Year CIP
Total
Theme
Administrative Facilities 1,320,000 1,551,000 0 0 0 2,871,000 Community Facilities 1,431,000 0 0 0 0 1,431,000
Convention Center 0 0 550,000 0 0 550,000
Electric Utility 93,832,936 184,175,278 43,319,753 31,988,667 36,453,197 389,769,831 Other Community Projects 9,460,082 6,453,710 6,118,404 6,379,067 6,471,696 34,882,959 Parks and Trails 3,028,920 278,000 4,500,000 0 0 7,806,920 Sewer Utility 19,045,006 17,797,655 27,013,733 19,374,086 8,986,880 92,217,360 Solid Waste 743,000 765,000 788,000 812,000 836,000 3,944,000 Storm Drain 761,000 714,000 0 0 0 1,475,000
Technology and Equipment 861,536 1,302,374 1,109,374 835,717 835,717 4,944,718 Transportation 12,869,832 13,790,232 11,659,932 12,539,932 10,865,582 61,725,510 Water and Recycled Water Utilities 6,715,000 5,215,000 3,935,000 3,485,000 3,485,000 22,835,000 Five-Year CIP Total 150,068,312 232,042,249 98,994,196 75,414,469 67,934,072 624,453,298

Administrative Facilities,
$2,871,000
Community Facilities,
$1,431,000
Convention Center,
$550,000
Electric Utility,
$389,769,831 Other Community
Projects, $34,882,959
Parks and Trails,
$7,806,920
Sewer Utility,
$92,217,360
Solid Waste, $3,944,000
Storm Drain, $1,475,000
Technology and
Equipment, $4,944,718
Transportation,
$61,725,510
Water and Recycled
Water Utilities,
$22,835,000
Proposed Five-Year CIP
94 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY FUND
FY 2022/23
Proposed
FY 2023/24
Proposed
FY 2024/25
CIP
FY 2025/26
CIP
FY 2026/27
CIP
Five-Year CIP
Total
Fund
Cemetery Capital Fund 9,225 9,597 10,028 10,422 10,556 49,828 Convention Center Capital Fund 0 0 550,000 0 0 550,000
Electric Utility Capital Fund 93,761,481 182,000,278 43,194,753 31,863,667 36,328, 197 387,148,376 Fire Department Capital Fund 588,153 429,057 236,132 1,827 1,851 1,257,020 General Government Capital Fund 425,000 925,000 875,000 835,717 835,717 3,896,434 Library Department Capital Fund 281,831 9,187 9,599 9,976 10,104 320,697 Parks and Recreation Department
Capital Fund
4,626,797 278,000 4,500,000 0 0 9,404,797
Patrick Henry Drive Infrastructure
Improvement Fund
69,205 71,281 73,419 75,622 77,891 367,418
Public Buildings Capital Fund 1,189,532 1,521,320 21,232 22,066 22,349 2,776,499 Recycled Water Capital Fund 50,000 50,000 50,000 50,000 50,000 250,000 Related Santa Clara Developer
Fund
2,902,465 3,041,508 2,539,633 2,647,758 2,686,511 13,817,875 Sewer Utility Capital Fund 19,815,641 18,612,672 27,880,150 20,287,466 9,916, 200 96,512,129 Solid Waste Capital Fund 743,000 765,000 788,000 812,000 836,000 3,944,000 Storm Drain Capital Fund 963,432 924,599 220,056 228,698 231,631 2,568,416 Street Lighting Capital Fund 71,455 2,175,000 125,000 125,000 125,000 2,621,455 Streets and Highways Capital
Fund 15,029,877 16,037,420 14,008,044 14,980, 255 13,337,200 73,392,796 Tasman East Infrastructure
Improvement Fund
2,876,218 27,330 28,150 28,995 29,865 2,990,558
Water Utility Capital Fund 6,665,000 5,165,000 3,885,000 3,435,000 3,435, 000 22,585,000 Five-Year CIP Total 150,068,312 232,042,249 98,994,196 75,414,469 67,934, 072 624,453,298

95 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY FUND

Cemetery Capital Fund,
$49,828
Convention Center
Capital Fund,
$550,000
Electric Utility
Capital Fund,
$387,148,376
Fire Department
Capital Fund,
$1,257,020
General Government
Capital Fund, $3,896,434
Library Department
Capital Fund, $320,697
Parks and Recreation
Department Capital Fund,
$9,404,797
Patrick Henry Drive
Infrastructure
Improvement Fund,
$367,418
Public Buildings Capital
Fund, $2,776,499
Recycled Water Capital
Fund, $250,000
Related Santa Clara
Developer Fund,
$13,817,875
Sewer Utility Capital Fund,
$96,512,129 Solid Waste Capital
Fund, $3,944,000
Storm Drain Capital Fund,
$2,568,416
Street Lighting Capital
Fund, $2,621,455
Streets and Highways
Capital Fund, $73,392,796
Tasman East Infrastructure
Improvement Fund,
$2,990,558
Water Utility Capital Fund,
$22,585,000
Proposed Five-Year CIP
96 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM UNFUNDED LIS T
Five-Year
Unfunded Total
Administrative Facilities
ADA Transition Plan Implementation 10,350,000
City Hall HVAC Rehabilitation Project 5,462,500
Fire Station 5 Replacement 14,076,266
Fire Station Renovations 20,000,000
Fire Stations 1, 7, 9 and Admin Building Renovation Study 360,000 Hazardous Material Management for City Properties 157,500 Morse Mansion Maintenance & Repair 8,322,500
New Project - Fire Station Security Upgrades 1,765,000
New Project - Replacement SCBA Filling Stations 100,000 New Project - Seismic Evaluation of EOC and Fire Station #2 100,000 Public Building Parking Lot Improvements 1,050,000
Repair to Historic Buildings 325,000
Repairs-Modifications to City Buildings 892,901
Stationary Standby Generators 10,224,000
Training Tower Stair Repair 1,140,000
Triton Museum Repair and Modifications 1,170,000
Administrative Facilities Unfunded Subtotal 75,495,667
Community Facilities
Aged Infrastructure at Critical/Poor Buildings 150,413,500 Central Library - Replacement of Lighting Controls 84,502 Central Park Master Plan - Aquatic Center, Community Recreation Center and Gymnasium 90,000,000 Central Park Master Plan- Aquatic Center Planning & Design 2,127,000 Facility Condition Assessment Update Project 400,000
Library Facilities Master Plan 200,000
Library Materials Sorter Upgrade Northside Branch 383,803 Library Space Utilization Study 95,000
Parks & Recreation Master Plan 300,000
Parks Service Center Roof 235,000
Repurchase Cemetery Property 170,000
Senior Center HVAC System Replacement Phase I 172,500
Community Facilities Unfunded Subtotal 244,581,305
Convention Center
Santa Clara Convention Center Condition Assessment Repair 12,649,017 Convention Center Unfunded Subtotal 12,649,017
97 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM UNFUNDED LIST
Five-Year
Unfunded Total
Parks and Trails
Aged Infrastructure at Critical/Poor Parks 99,734,900
Earl Carmic
hael Park Playground Rehabilitation 2,955,700
Henry Schmidt Park Playground Rehabilitation 2,421,500
Mary Gomez Park Playground Rehabilitation 2,446,900
Park Improvements 519,000
Parkland Acquisition 33,406,400
Parks and Trails Unfunded Subtotal 141,484,400
Storm Drain
Lafayette St. Underpass at Subway Pump Station 4,301,000 SDPS Motor
and Control Maintenance, Repair, and Replacement 1,023,418 Storm Drain Pump Station Facility Maintenance & Repair 222,614 Storm Drain Pump Station Outfall Reconstruction Program 300,000 Storm Drain Repairs and Maintenance 550,000
Storm Drain Slide Gate Rehabilitation 1,400,000
Storm Drain System Improvements 20,240,000
Storm Water Retention Basin Remediation 7,280,000
Storm Drain Unfunded Subtotal 35,317,032
Technology and Equipment
Consolidate and Upgrade Servers 400,000
Cyber Security Risk Mitigation 873,328
Defibrillator/Monitor Replacement 70,000
FHRMS Update Project 78,566
Intranet Collaboration Suite Implementation 250,000
Knox Vault Replacements 40,000
Protective Equipment Replacement 160,626
Replacement Aerial Truck Apparatus 1,500,000
Thermal Imaging Camera Replacement 120,000
Technology and Equipment Unfunded Subtotal 3,492,520
Transportation
Annual Creek Trail Rehabilitation Program 350,000 Annual Curb Ramp Installation 2,605,000
Annual Street Maintenance and Rehabilitation Program 36,755,840 Bicycle Route Wayfinding - Phase I 300,000

98 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM UNFUNDED LIST
Five-Year
Unfunded Total
Transportation
Bridge Maintenance Program 730,000
Irrigation Controller Upgrades 500,000
MCB/GAP Intersection Improvement Project 10,830,000 Public Alley Pavement Maintenance and Rehabilitation 2,080,000 Public Right of Way Standards Update 190,000 Public Right-of-Way Landscaping Improvement 500,000 Safe Routes to School 270,000
Sidewalk, Curb and Gutter Repair 2,300,000 Street Tree Services 463,050
Traffic Engineering Consultant Support 300,000
Transportation Modeling Update 55,125
Vision Zero Plan 315,000
Transportation Unfunded Subtotal 58,544,015
Five-Year Unfunded Total 571,563,956

99 FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM OPERATING IMPACTS
FY 2022/23
Proposed
FY 2023/24
Proposed
FY 2024/25
CIP
FY 2025/26
CIP
FY 2026/27
CIP
Convention Center
Santa Clara Convention Center Condition
Assessment Repair
0 6,000 6,000 6,000 6,000
Convention Center Operating Impacts Subtotal 0 6,000 6,000 6,000 6,000 Electric Utility
Electric Vehicle (EV) Charging 90,000 120,000 150,000 180,000 210,000 Electric Utility Operating Impacts Subtotal 90,000 120,000 150,000 180,000 210,000 Transportation
Bassett and Laurelwood Bicycle Lanes 0 500 500 500 500
El Camino Real Bike Lane Project 0 0 0 15,000 25,000
Multimodal Improvement Plan Phase 2 Projects 500 500 600 600 600 Uncontrolled Crosswalks Improvements Project 0 2,250 2,250 2,250 2,250 Transportation Operating Impacts Subtotal 500 3,250 3,350 18,350 28,350 Five-Year Operating Impacts Total 90,500 129,250 159,350 204,350 244,350

100

FY 2 022/23 AND FY 20 2 3/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | CIP SUMMARIES AND GRAPHS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY EXPENDITURE

CATEGORY
FY 2022/23
Proposed
FY 2023/24
Proposed
FY 2024/25
CIP
FY 2025/26
CIP
FY 2026/27
CIP
Five-Year
CIP Total
Expenditure Category
Construction 76,235,513 103,871,916 55, 231, 478 57,710,499 44,604,407 337,653,813 Contingency/Miscellaneous 9,514,792 21,655,742 4,159,496 2,392,496 3,207,704 40,930,230 Developer Costs 2,849,684 0 0 0 0 2,849,684
Engineering 20,079,939 23,290,997 4,583,167 4,766,547 3,430,014 56,150,664 Engineering Management Services 3,941,683 3,643,080 3,806,691 3,956,181 4,006, 918 19,354,553 Equipment 31,562,140 73,707,978 25,376,978 453,321 3,849,321 134,949,738 Land 0 0 0 0 2,508,000 2,508,000
Mandated Program Costs 300,000 0 0 0 0 300,000
Personnel 5,584,561 5,872,536 5,836,386 6,135,425 6,327,708 29,756,616 Five-Year CIP Total 150,068,312 232,042,249 98,994,196 75,414,469 67,934,072 624,453,298

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102

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SUMMARY OF BUDGETED

POSITIONS
Summary of Budgeted Positions by Department/Office

FY 2020/21
Adopted
FY 2021/22
Adopted1
FY 2022/23
Adopted1
FY 2022/23
Change
FY 2022/23
Amended1
Positions by Department/Office
Mayor and City Council Offices2 9.00 9.00 9.00 0.00 9.00 City Attorney's Office 8.00 8.00 8.00 0.00 8.00
City Auditor’s Office 3.33 3.00 3.00 0.00 3.00
City Clerk's Office3, 8 7.00 6.00 6.00 1.00 7.00
City Manager's Office/Non-Departmental3 24.00 19.00 19.00 0.00 19.00 Community Development Department4 68.75 72.00 72.00 1.00 73.00 Electric Utility Department 5, 8 198.00 198.00 198.00 16.00 214.00 Finance Department5 69.42 68.75 68.75 1.00 69.75
Fire Department6,8 168.25 154.50 154.50 1.00 155.50
Human Resources Department6 15.75 14.00 14.00 1.00 15.00 Information Technology Department 7.00 6.00 6.00 0.00 6.00 Library Department 46.75 42.50 42.50 0.00 42.50
Parks and Recreation Department 82.75 77.75 77.75 0.00 77.75 Police Department7 239.00 221.00 221.00 10.00 231.00
Department of Public Works6 131.50 122.50 122.50 1.00 123.50 Water and Sewer Utilities Department 73.00 73.00 73.00 0.00 73.00 Total Budgeted FTE by
Department/Office 1,151.50 1,095.00 1,095.00 32.00 1,127.00

1The positions above represent all funded positions. This excludes the 34.50 positions frozen on March 9, 2021 (Agenda Item

5.0 – Report to Council 21- 402) and the 5.0 positions frozen on June 22,2021 (Agenda Item 5.0 - Report to Council 21- 526). 2Mayor and City Councilmember positions shown as 7.0 Full -Time Equivalents (budgeted positions). 3Reflects the unfreezing of 1.0 Deputy City Clerk in the Clerk’s Office and the freezing of 1.0 Senior Management Analyst in the City Manager’s Office as well as the addition of 1.0 Management Analyst position in the City Manager’s Office that was previously approved in the Stadium Authority Budget.
4Reflects the addition of 1.0 Assistant Director, offset by shifting eligible position costs to the Building Development Fund. 5Reflects positions added during FY 2021/22 to support existing needs and future expansion of the City’s Electric Utility. 6The FY 2022/23 additions of 1.0 Contracts Manager in the Finance Department and 1.0 Human Resources Technician in the Human Resources Department support the Electric Utility and are reimbursed by the Electric Utility Fund. The additions of 1.0 Deputy Fire Marshal in the Fire Department and 1.0 Public Works Inspector in the Public Works Department are funded by the Related project and were previously frozen. 7As a part of the adoption of the FY 2021/22 and 2022/23 Biennial Operating Budget, the City Council provided additional funding of $1.7 million to the Police Department to restore several frozen and eliminated positions. The FY 2022/23 Amended Budget reflects the restoration of 10.0 positions. 8Position reclassifications include : 1.0 Deputy City Clerk to 1.0 Senior Management Analyst in the Clerk’s Office; 1.0 Staff Aide II to 1.0 Management Analyst, 1.0 Resource Analyst II to 1.0 Sr. Resource Analyst, 1.0 Engineering Aide to 1.0 Sr.

Electric Utility Engineer, 1.0 Project Manager to 1.0 Electric Utility Program Analyst, and 1.0 Sr. Business Analyst to 1.0 Management Analyst in the Electric Utility Department; and 1.0 Office Specialist IV to 1.0 Management Analyst in the Fire Department .
103

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SUMMARY OF BUDGETED

POSITIONS
Summary of Budgeted Positions by Fund

FY 2020/21
Adopted
FY 2021/22
Adopted
FY 2022/23
Adopted
FY 2022/23
Change
FY 2022/23
Amended
Positions by Fund
General Fund (001)1,2 815.59 718.46 718.46 14.05 732.51 Special Revenue Funds
Housing and Urban Development (562) 2.47 3.30 3.30 0.00 3.30 City Affordable Housing (165) 1.71 1.20 1.20 0.00 1.20
Housing Successor (169) 1.61 1.55 1.55 0.00 1.55
Downtown Parking Maintenance District (025) 0.50 0.50 0.50 0.00 0.50 Housing Authority (164) 0.43 0.65 0.65 0.00 0.65
Building Development Services Fund (155) 0.00 43.00 43.00 0.46 43.46 Convention Center Maintenance District (026) 0.10 0.10 0.10 0.00 0.10 Subtotal Special Revenue Funds 6.82 50.30 50.30 0.46 50.76 Enterprise Funds
Electric (091, 191) 182.00 198.50 198.50 15.50 214.00
Water Utility (092) 47.25 47.25 47.25 0.00 47.25
Sewer Utility (094) 22.45 22.45 22.45 0.00 22.45
Solid Waste (096) 6.65 6.65 6.65 0.00 6.65
Cemetery (093) 5.00 5.00 5.00 0.00 5.00
Recycled Water (097) 3.30 3.30 3.30 0.00 3.30
Convention Center Enterprise (860) 0.00 1.50 1.50 (0.30) 1.20 Subtotal Enterprise Funds 266.65 284.65 284.65 15.20 299.85 Internal Service Funds
Fleet Management (053) 15.75 14.75 14.75 0.00 14.75
Public Works Capital Projects Management (044) 14.69 14.34 14.34 (0.21) 14.13 Information Technology Services (045) 7.00 6.00 6.00 0.00 6.00 Subtotal Internal Service Funds 37.44 35.09 35.09 (0.21) 34.88 Capital Improvement Program Funds
Electric Utility Capital (591) 16.00 0.00 0.00 0.00 0.00 Related Santa Clara Developer (540) 9.00 6.50 6.50 2.50 9.00 Subtotal Capital Improvement Program Funds 25.00 6.50 6.50 2.50 9.00 Total Budgeted FTE by Fund 1,151.50 1,095.00 1,095.00 32.00 1,127.00 Note: FY 2021/22 includes a shift of 43 positions from the General Fund to the new Building Development Services Fund.

1 The positions above represent all funded positions. This excludes the 34.50 positions frozen on March 9, 2021 (Agenda Item

5.0 – Report to Council 21- 402) and the 5.0 positions frozen on June 22,2021 (Agenda Item 5.0 -Report to Council 21- 526). 2The FY 2022/23 Amended Budget includes 10.0 positions restored in the Police Department , 2.0 positions (1.0 in the Finance Department and 1.0 in the Human Resources Department) that are reimbursed by the Electric Utility Fund, and 1.0 position reimbursed by the Stadium Authority as well as minor position shifts . 104

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | SUMMARY OF BUDGETED

POSITIONS
Summary of Frozen Positions by Department
*As approved by City Council on March 9, 2021 as part of the COVID-19 Phase 1 Budget Rebalancing and the 5.0 positions frozen on June 22,2021 (Agenda Item 5.0 -Report to Council 21 -526).

1On September 28, 2021 (RTC 21-1299), the City Council approved the freezing of 1.0 Senior Management Analyst in the City Manager’s Office and the unfreezing of 1.0 Deputy City Clerk in the Clerk’s Office.

Department Classification FTE
City Attorney's Office Legal Office Specialist III 1.00 City Manager's Office/Non-Departmental Senior Management Analyst 1 1.00 City Manager's Office/Non-Departmental Assistant City Manager 1.00 City Manager's Office/Non-Departmental Deputy City Manager 1.00 City Manager's Office/Non-Departmental Office Specialist III 1.00 Community Development Associate Planner 1.00
Community Development Office Specialist II 0.75
Finance Office Specialist III 1.00
Fire Firefighter 12.00
Fire Quality Improvement Nurse 0.75
Human Resources Human Resources Division Manager 1.00
Parks and Recreation Grounds Maintenance Worker I 1.00
Parks and Recreation Grounds Maintenance Worker II 2.00 Parks and Recreation Office Specialist II 1.00
Police Police Sergeant 2.00
Police Police Officer 4.00
Public Works Assistant Engineer 1.00
Public Works Associate Engineer 1.00
Public Works Automotive Technician III 1.00
Public Works Street Maintenance Worker I/II 1.00
Public Works Street Maintenance Worker III 3.00
Public Works Street Maintenance Worker IV 1.00
Total Positions Frozen 39.50
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FY 202 2/2 3 AND FY 202 3 /2 4 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE

DEBT SERVICE

Overview

Under the authority of the City Manager, the City executes debt instruments, oversees the accounting and reporting of debt, administers debt proceeds, manages continuing disclosure and debt compliance requirements, and makes debt service payments, while acting with prudence, diligence, and attention to prevailing economic conditions.

The City of Santa Clara uses debt financing as a tool to maintain its long- term financial stability by paying for certain expenditures over time. Debt financing is also a tool for managing cash flow when large, one- time outlays are required as in the case of constructing a new building or large-scale upgrades to infrastructure. This section provides a summary of the City's debt service for the ten-year forecast period. Included is the Computation of Legal Debt Margin, which calculates the City's debt limit as defined by the City Charter. Also included is a debt service schedule representing the currently outstanding debt of the City. The City does not currently have any outstanding general obligation debt.

Debt Policies

The Santa Clara City Charter, Section 1309, limits the allowable bonded indebtedness of the City at 15% of the total assessed valuation of property within the City, exclusive of revenue bonds or any indebtedness that has been or may be incurred for the purposes of acquiring, constructing, extending, or maintaining municipally owned utilities, for which purposes a further indebtedness may be incurred by the issuance of bonds, subject only to the provisions of the State constitution and the City Charter.

Section 1321 of the City Charter further provides for the issuance of revenue bonds when authorized at an election as provided therein. The City Charter also gives City Council the power to issue revenue bonds to finance the generation, production, transmission and distribution of electric energy, including the acquisition and/or construction of lands and facilities therefor, without authorization at an election.

The City's Debt Management Policy provides guidance for the issuance of bonds and other forms of indebtedness to finance land acquisition, construction, equipment, and other capital requirements of the City. While the issuance of debt is an appropriate method of financing capital projects and major equipment acquisitions, such issuance shall be carefully monitored.

The issuance of debt shall be closely aligned with the cash flow requirements of the projects being financed. Within the limitations of the City Charter, determining the amount of indebtedness the City can afford begins by assessing the sufficiency of future revenues. The amount of debt issued is based on the requirements of the approved Capital Improvement Program, subject to the condition that sufficient revenues are projected to be available to pay debt service.

Factors such as debt service coverage requirements outlined in the bond indentures, the impact on the citizens (tax rates), and any impact on the bond ratings will be carefully considered. Different factors are considered for each type of credit. For example, electric, water or sewer bonds will take into consideration the impact on customer utility rates. Other factors such as providing debt capacity for future programs and existing and forecasted fund balances, including reserves, will also be taken into consideration.

The City believes that debt is an equitable means of financing projects and represents an important source of meeting fiscal responsibilities. The City obtains and maintains long- term debt for large capital improvement projects. The Finance Department manages the City’s debt with prudence, diligence, and with attention to prevailing economic conditions and applicable laws. It manages issuance of debt, administers debt proceeds, prepares ongoing disclosure, handles debt and tax compliance, and makes debt service payments. City departments with debt -financed capital programs coordinate with the Finance Department in implementing and handling debt related transactions. Semiannual updates are prepared by the Finance Department on outstanding debt for the City of Santa Clara, its Agencies and Corporations. This report is presented as a standard management practice that provides a valuable overview of the current status of th e City’s long -term debt 107

FY 202 2/2 3 AND FY 202 3 /2 4 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE obligations. The current City Council approved debt policy can be found online at:
http://santaclaraca.gov/home/showdocument?id=63748.

Long-Term Debt Planning

The City employs a comprehensive multi -year, long-term capital improvement planning program that is updated every two years. Debt management is a major component of the financial planning model which incorporates projected financin g needs for infrastructure development that is consistent with the City’s growth, while at the same time measuring and assessing the cost and timing of any debt issuance.

Issuer Credit Rating

The City seeks to obtain and maintain the highest possible credit ratings for all categories of short- and long-term debt. The City’s bonds are rated favorably by major bond rating agencies, Fitch and Standard and Poor's (S&P). The City’s Certificates of Participation are rated 'AA' by S&P. The City's Electric Revenue Bonds are rated 'AA-' by Fitch and 'A+' by S&P.

Maintaining high bond ratings has resulted in a broader market for the City’s bonds and lower interest costs to the City.

Public Facilities Financing Corporation

The City of Santa Clara Public Facilities Financing Corporation (PFFC) was formed in 1997 for the purpose of issuing Certificates of Participation (COPs) to provide financing for the construction of major City facilities. Members of the City Council are also members of the PFFC Board. Debt servi ce on COPs is secured by lease payments made by the City's General Fund to the PFFC for use of the constructed facilities for public purposes. In accordance with lease agreements, the PFFC assigns lease payments received from the City to the trustee for payment to the certificate holders.

Long-Term Debt Obligations

Certificates of Participation (COPs) are a debt instrument evidencing a pro-rata share in a specific pledged revenue source, usually lease payments. These lease payments are typically secured by an installment sale or leaseback agreement.

Revenues are pledged to pay lease payments, and such lease payments are used to pay debt service on the COPs. The lessor typically assigns the lease and the payment to a trustee, which distributes the payments to certificate holders. These obligations do not constitute indebtedness under the State constitutional debt limitation and are not subject to voter approval.

Lease Revenue Bonds are a lease obligation secured by a leaseback arrangement with a public entity, where general operating revenues are pledged to pay the lease payments, and in turn are used to pay debt service on the debt. These obligations do not constitute indebtedness under the State constitutional debt limitation and are not subject to voter approval.

In connection with COPs and Lease Revenue Bonds, payments to be made under valid leases are payable only in the year in which use and occupancy of the leased property is available, and lease payments may not be accelerated. Lease financing requires the fair market rental value of the leased property to be equal to or greater than the required debt service or lease payment schedule. The governmental lessee is obligated to place in its annual budget the rentals that are due and payable during each fiscal year the lessee has use of the leased property.

Installment Sale Agreements are debt obligations secured by the assignment of installment payments required to be paid by the City from certain pledged revenues, such as revenues from an enterprise, in an amount sufficient to pay the installment payments, including interest. The Cit y’s outstanding Installment Sale Agreement s are payable solely from the City’s Sewer Utility and is not secured by any pledge of ad valorem taxes or General Fund revenues of the City. These obligations do not constitute indebtedness under the State constitutional debt limitation and are not subject to voter approval.

Revenue Bonds are obligations payable from revenues generated by an enterprise, such as electric, water, or wastewater utilities. The City's outstanding utility Revenue Bonds are payable solely from the City's Electric Utility and Sewer Utility Enterprise Funds and are not secured by any pledge of ad valorem taxes or General Fund revenues of the City.

108

FY 202 2/2 3 AND FY 202 3 /2 4 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE Summary of FY 2022/23 and 2023/24 Debt Service

The Biennial Operating Budget includes $19.8 million in debt service FY 2022/23 and $21.6 million in debt service for FY 2023/24. A ten-year debt service schedule is shown herein.

2013 Refunding Certificates of Participation (Central Park Library Project)

On March 28, 2013, the PFFC issued $18.54 million of Refunding Certificates of Participation (2013 COPs) to provide funds to refund outstanding 2002A Certificates of Participation, which were originally issued to provide financing to build a new Central Park Library. The 2013 COPs mature annually beginning February 1, 2014 through February 1, 2032 and bear coupon rates ranging from 2.00% to 3.75%. Debt Service is secured by lease payments to be made by the City to the PFFC for use of the library site. The PFFC assigns the lease payments to the certificate owners.

Installment Sale Agreement, Series 2016 (Trimble Road Sewer Project)

On March 8, 2016, the City entered into a $12.0 million Installment Sale Agreement with the PFFC in order to provide funds for the Trimble Road Trunk Sanitary Sewer Improvement Project. The PFFC entered into a separate Assignment Agreement with DNT Asset Trust, a wholly owned subsidiary of JPMorgan Chase National Association (the “Agreement”), to assign its rights under the Installment Sale Agreement to DNT Asset Trust. The Agreement has an interest rate of 2.14% and semiannual payments are due beginning August 1, 2016 through February 1, 2031. Installment payments on the Agreement are secured by a pledge of net revenues of the Wastewater System.

Installment Sale Agreement, Series 2020 (Regional Wastewater Facility)

The City co- owns the Regional Wastewater Facility with the City of San José. The facility is being rebuilt, with the City’s portion of the costs budgeted as a separate project in the current Capital Improvement Program budget. The Water and Sewer Utilities Department oversees it. On June 11, 2020, the City entered into an Installment Sale Agreement (the “ISA”) with the PFFC to provide funds for the San Jose/Santa Clara Regional Wastewater Facility Project (the “Project”). The PFFC entered into a separate Assignment Agreement with JPMorgan Chase Bank, N.A. (the “Assignment Agreement”), to assign its rights under the ISA to JPMorgan Chase Bank, N.A. The ISA in the amount of $50.0 million carries a variable rate of interest equal to 80% of 1- month LIBOR (reset daily), plus 0.95% per annum. The City may draw on the Installment Sale Agreement as necessary with an initial $20.0 million drawn on the date of closing. Interest is due each January 1 and July 1, commencing January 1, 2021. Principal on outstanding advances is due on or before July 1, 2024. In addition, the PFFC shall pay an undrawn fee on any amount not yet drawn at a rate of 0.325% per annum on each interest payment date.

Installment payments on the Agreement are secured by a pledge of net revenues of the Wastewater System on a subordinate basis to the Trimble Road Installment Payments. An additional drawdown of $18.6 million is planned for FY 2021/22.

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FY 202 2/2 3 AND FY 202 3 /2 4 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE Electric Revenue Refunding Bonds, Series 2013A

On April 24, 2013, SVP issued $64.38 million of Electric Revenue Refunding Bonds, Series 2013A (Electric 2013A Bonds), to provide funds, together with other available moneys, to refinance outstanding Electric 2003A Bonds. The Electric 2013A Bonds mature annually beginning on July 1, 2014 through July 1, 2028 and bear coupon rates ranging from 3.00% to 5.00%.

Debt service on the Electric 2013A Bonds is secured by a pledge of net revenues of the Electric Utility Enterprise Fund.

The Electric 2013A Bonds maturing July 1, 2023 through July 1, 2028 were refunded on April 10, 2020 by the Subordinate Electric Revenue Refunding Bonds, Series 2020-2 described below. The refunding of a portion of the Electric 2013A Bonds resulted in overall savings of $1,706,384.

Electric Revenue Refunding Bonds, Series 2018A

On December 18, 2018, SVP issued $48.80 million of Electric Revenue Refunding Bonds, Series 2018A (Electric 2018A Bonds) to refinance $54.58 million outstanding principal amount of Variable Rate Demand Electric Revenue Bonds, Ser ies 2008B and terminate a related interest rate swap transaction. The Electric 2018A Bonds mature annually beginning on July 1, 2019 through July 1, 2027 and bear coupon rates of 5.00%. Debt service on the Electric 2018A Bonds is secured by a pledge of net revenues of the Electric Utility Enterprise Fund.

Subordinate Electric Revenue Refunding Bonds, Series 2020-1, 2020-2, and 2020-3

Series 2020-1 Bonds
On April 10, 2020, SVP issued $52.985 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-1 (Electric 2020-1 Bonds) to refinance $54.83 million outstanding principal amount of Electric Revenue Refunding Bonds, Series 2011 A. The Electric 2020-1 Bonds bear 1.74% coupon rates, mature annually beginning on July 1, 2028 through July 1, 2032, and were sold at an All-In True Interest Cost of 1.43%.

On April 2, 2021, the Electric 2020-1 Bonds were converted to tax-exempt basis, which now bear 1.36% coupon rates. Debt service on the Electric 2020-1 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.

Series 2020-2 Bonds
On April 10, 2020, SVP issued $34.315 million of Subordinate Electric Revenue Refunding Bonds, Series 2020- 2 (Electric 2020-2 Bonds) to refinance $30.725 million of outstanding Electric Revenue Refunding Bonds, Series 2013 A. The Electric 2020-2 Bonds bear 1.31% coupon rates, mature annually beginning on July 1, 2023 through July 1, 2028, and were sold at an All-In True Interest cost of 1.21%. Debt service on the Electric 2020-2 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.

The Electric 2020-2 Bonds have initially been issued on a taxable basis as well, with the potential to be converted to a tax- exempt rate in the future. This structure allowed the City to lower interest costs with the potential to capture additional savings upon a conversion of the interest rate to a tax-exempt rate when the bonds can be current refunded under applicable tax law.

Series 2020-3 Bonds
On April 10, 2020, SVP issued $16.72 million of Subordinate Electric Revenue Refunding Bonds, Series 2020- 3 (Electric 2020-3 Bonds) to refinance $19.413 million outstanding principal amount of Subordinated Electric Revenue Bonds, Series 2014. The Electric 2020- 3 Bonds bear 0.58% coupon rates, mature annually beginning on July 1, 2020 through July 1, 2024, and were sold at an All- In True Interest Cost of 0.70%. Debt service on the Electric 2020- 3 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.

110

FY 202 2/2 3 AND FY 202 3 /2 4 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE Fis cal Year Net Local State Net Net Total % of Growth Total Direct Ending Secured Asse sse dUnsecured Asse sse d Asse sse d of Asse sse d Tax June 30 Roll (1) Valuation Roll Valuation Valuation Valuation Valuation Rate 2011 / 12 19,818,648 4,641 3,892,148 23, 715,437 23,830,461 99.52% 0.54% 1.14% 2012 / 13 20,475,348 4,641 4,702,675 25,182,664 25,295,792 99.55% 6.19% 1.16% 2013 / 14 22,216,962 4,641 4,680,536 26,902,139 27,012,697 99.59% 6.83% 1.14% 2014 / 15 24,294,056 4,183 4,352,204 28,650,443 28,758,679 99.62% 6.50% 1.13% 2015 / 16 27,659,960 4,183 5,157,346 32,821,489 32,927,777 99.68% 14.56% 1.16% 2016 / 17 30,672,596 4,183 5,856,885 36,533,664 36,638,297 99.71% 11.31% 1.15% 2017 / 18 33,449,607 3,896 6,553,560 40,007,063 40,109,539 99.74% 9.51% 1.16% 2018 / 19 36,596,483 354 7,266,592 43,863,429 43,964,914 99.77% 9.64% 1.13% 2019 / 20 38,502,828 870 7,629,244 46,132,942 46,232,453 99.78% 5.17% 1.20% 2020 / 21 42,047,766 870 7,972,493 50,021,129 50,118,954 99.80% 8.43% 1.18% Note:
(1) Net of Home Owner Property Tax Relief.

Source: County of Santa Clara, Department of Finance

CITY OF SANTA CLARA

ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Las t Ten Fis cal Years
(In Thousands)

111

FY 202 2/2 3 AND FY 202 3 /2 4 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE Fis cal Year Net
Ending Asse sse d Debt Limit- 15% of Debt Applicable Legal Debt June 30 Valuation Asse sse d Va lua tion (1) to Limit Margin 2011 / 12 23,715,437 3,557,316 - 3,557,316 2012 / 13 25,182,664 3,777,400 - 3,777,400 2013 / 14 26,902,139 4,035,321 - 4,035,321 2014 / 15 28,650,444 4,297,567 - 4,297,567 2015 / 16 32,821,489 4,923,223 - 4,923,223 2016 / 17 36,533,664 5,480,050 - 5,480,050 2017 / 18 40,007,063 6,001,059 - 6,001,059 2018 / 19 43,863,429 6,579,514 - 6,579,514 2019 / 20 46,132,942 6,934,868 - 6,934,868 2020 / 21 50,021,129 7,503,169 - 7,503,169 Note:

Sources: County of Santa Clara, Department of Finance and City of Santa Clara (1) Section 1309 of the City Charter of the City states: "Bonded Debt Limit. The bonded indebtedness of the City may not in the aggregate exceed the sum of fifteen percent (15%) of the total assessed valuation of property within the City, ex
clusive of revenue bonds or any indebtedness that has been or may hereafter be incurred for the purposes of acquiring, constructing, extending, or maintaining municipally owned utilities for which purposes a further indebtedness may be incurred by the issuance of bonds, subject only to the provisions of the State Constitution and this Charter."
City of Santa Clara
Legal Debt Margin Information
Las t Ten Fis cal Years
(In Thousands)

112

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE

DEBT SERVICE SCHEDULE
Actual Current Proposed Proposed Plan Plan Plan Plan Plan Plan Plan Plan Bond Issue 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 Current Debt Issued
Lease Financing:
2010 Lease Financing
(Police Administration Building Project)
Principal 1,030,000 1,065,000 0 0 0 0 0 0 0 0 0 0
Interest 67,069 29,164 0 0 0 0 0 0 0 0 0 0
Arbitrage Computation 0 0 0 0 0 0 0 0 0 0 0 0
1,097,069 1,094,164 0 0 0 0 0 0 0 0 0 0
Total Lease Financing 1,097,069 1,094,164 0 0 0 0 0 0 0 0 0 0 Certificates of Participation:
2013 Refunding COPs
(Central Park Library Project)
Principal 900,000 940,000 980,000 1,030,000 1,085,000 1,120,000 1,150,000 1,195,000 1,235,000 1,280,000 1,325,000 665,000 Interest 503,275 467,275 420,275 371,275 319,775 285,869 249,469 209,219 167,394 122,625 74,625 24,937 Trustee 1,060 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 Arbitrage Computation 0 0 1,900 0 0 0 0 1,900 0 0 0 0
1,404,335 1,408,375 1,403,275 1,402,375 1,405,875 1,406,969 1,400,569 1,407,219 1,403,494 1,403,725 1,400,725 691,037 Total Certificates of
Participation
1,404,335 1,408,375 1,403,275 1,402,375 1,405,875 1,406,969 1,400,569 1,407,219 1,403,494 1,403,725 1,400,725 691,037 Installment Sale Agreement:
2016 Sanitary Sewer Improvements (Trimble Road Sewer Project) Principal 745,719 761,763 778,152 794,893 811,995 829,465 847,310 865,540 884,161 903,183 922,615 0 Interest 191,730 175,687 159,298 142,556 125,454 107,985 90,139 71,910 53,288 34,266 14,834 0 Arbitrage Computation 2,150 0 0 0 0 2,150 0 0 0 0 0 0
939,599 937,450 937,450 937,449 937,449 939,600 937,449 937,450 937,449 937,449 937,449 0

113
City of
Santa Clara

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE

DEBT SERVICE SCHEDULE
Actual Current Proposed Proposed Plan Pla n Plan Plan Plan Plan Plan Plan Bond Issue 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 Current Debt Issued
2020 Sanitary Sewer Improvements (Regional Wastewater Facility) Principal 0 0 0 0 38,588,216 0 0 0 0 0 0 0
Interest 330,381 951,585 951,585 1,684,102 0 0 0 0 0 0 0 0 Arbitrage Computation 0 0 0 0 0 0 0 0 0 0 0 0
330,381 951,585 951,585 1,684,102 38,588,216 0 0 0 0 0 0 0 Total Installment Sale
Agreement
1,269,980 1,889,035 1,889,035 2,621,551 39,525,665 939,600 937, 449 937,450 937,449 937,449 937,449 0 Revenue Bonds:

Electric Revenue Refunding Bonds, Series 2013A
Principal 4,115,000 4,320,000 4,545,000 0 0 0 0 0 0 0 0 0 Interest 546,125 335,250 113,625 0 0 0 0 0 0 0 0 0
Trustee 1,855 1,955 1,955 0 0 0 0 0 0 0 0 0
Arbitrage Computation 0 0 1,900 0 0 0 0 0 0 0 0 0
4,662,980 4,657,205 4,662,480 0 0 0 0 0 0 0 0 0
Electric Revenue Refunding Bonds, Series 2018A
Principal 4,485,000 4,785,000 5,110,000 5,440,000 5,795,000 6,005,000 6,320,000 6,655,000 0 0 0 0 Interest 2,117,625 1,885,875 1,638,500 1,374,750 1,093,875 798,875 490,750 166,375 0 0 0 0 Trustee 2,250 2,350 2,350 2,350 2,350 2,350 2,350 2,350 0 0 0 0 Arbitrage Computation 0 0 0 0 0 1,350 0 1,350 0 0 0 0
6,604,875 6,673,225 6,750,850 6,817,100 6,891,225 6,807,575 6,813,100 6,825,075 0 0 0 0

114
City of
Santa Clara

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE

Electric Revenue Refunding Bonds,
Series 2020-1
Principal 0 0 0 0 0 0 0 0 6,555,000 12,745,000 12,910,000 13,165,000 Interest 901,451 538,445 720,596 720,596 720,596 720,596 720,596 720,596 676,022 544,782 370,328 193,018 Trustee 2,250 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 Arbitrage Computation 0 0 0 0 0 1,350 0 0 0 1,350 0 0
903,701 540,945 723,096 723,096 723,096 724,446 723,096 723,096 7,233,522 13,293,632 13,282,828 13,360,518 Electric Revenue Refunding Bonds,
Series 2020-2
Principal 0 0 0 5,755,000 5,695,000 5,910,000 5,975,000 6,050,000 4,930,000 0 0 0 Interest 325,907 449,527 425,201 320,663 262,268 203,082 142,469 81,141 25,143 0 0 0 Trustee 1,250 2,500 2,500 2,500 2,500 2,500 2,500 2,500 0 0 0 0 Arbitrage Computation 0 0 0 0 0 0 1,350 0 1,350 0 0 0
327,157 452,027 427,701 6,078,163 5,959,768 6,115,582 6,121,319 6,133,641 4,956,493 0 0 0 Electric Revenue Refunding Bonds,
Series 2020-3
Principal 980,000 3,900,000 3,925,000 3,945,000 3,970,000 0 0 0 0 0 0 0 Interest 67,466 79,982 57,290 34,467 11,513 0 0 0 0 0 0 0 Trustee 1,250 2,500 2,500 2,500 2,500 0 0 0 0 0 0 0
Arbitrage Computation 1,200 0 0 0 0 0 0 0 0 0 0 0
1,049,916 3,982,482 3,984,790 3,981,967 3,984,013 0 0 0 0 0 0 0 Total Electric Revenue Bonds 13,548,629 16,305,884 16,548,916 17,600,325 17,558,102 13,647,603 13,657,515 13,681,812 12,190,015 13,293,632 13,282,828 13,360,518 17,320,013 20,697,458 19,841,226 21,624,251 58,489,642 15,994,172 15,995,533 16,026,481 14,530,958 15,634,806 15,621,002 14,051,555 Total Current Debt Issued

115
City of
Santa Clara

FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE

DEBT SERVICE FUNDS

Public Facilities Financing Corporation (431)

The City of Santa Clara Public Facilities Financing Corporation (PFFC) was formed in 1997 for the purpose of issuing Certificates of Participation (COPs) to provide financing for the construction of major City facilities. Members of the City Council are also members of the PFFC Board. Debt service on COPs is secured by lease payments made by the City's General Fund to the PFFC for use of the constructed facilities for public purposes. In accordance with lease agreements, the PFFC assigns lease payments received from the City to the trustee for payment to the certificate holders.

Electric Utility Debt Service Fund (491)

The Electric Utility Debt Service Fund is used to pay principal, interest, and related service charges on obligations resulting from the issuance of debt by the Electric Utility. Bond proceeds are used to pay for capital costs associated with the Electric Utilities’ generation, transmission and distribution facilities. Debt service is payable from Adjusted Net Revenues of the Electric Utility.

Sewer Utility Debt Service Fund (494)

The Sewer Utility Debt Service Fund is used to pay principal, interest, and related service charges on obligations resulting from the issuance of debt by the Sewer Utility. Bond proceeds are used to pay for capital improvements associated with the Sewer System, including the Trimble Road Trunk Sanitary Sewer Improvement Project. Debt service is payable from Net Revenues of the Sewer Utility.

This is the second fiscal year of the biennial operating budget. The following section details the City of Santa Clara’s Debt Service Funds’ Statements of Sources and Uses and their Proposed Amended Budget for Fiscal Year 2022/23. 116

FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE DEBT SERVICE FUNDS | ELECTRIC UTILITY DEBT
SERVICE FUND (491)
2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Beginning Fund Balance
Bond Reserve 3,632,533 3,632,533 3,632,533 3,632,533 3,632,533 Reserve for Debt Service 7,882,462 9,817,239 9,817,239 7,986,294 9,817,239 Total Beginning Fund Balance 11,514,995 13,449,772 13,449,772 11,618,827 13,449,772 Revenue
Interests 185,349 0 0 0 0
Total Revenue 185,349 0 0 0 0
Transfers From
Electric Utility Fund 13,551,379 16,305,884 16,305,884 16,548,917 16,548,917 Total Transfers From 13,551,379 16,305,884 16,305,884 16,548,917 16,548,917 Total Source of Funds 25,251,723 29,755,656 29,755,656 28,167,744 29,998,689 Expenditures
Debt Service 11,768,799 16,294,079 16,294,079 16,535,212 16,535,212 Administrative Costs 33,152 11,805 11,805 13,705 13,705 Total Expenditures 11,801,951 16,305,884 16,305,884 16,548,917 16,548,917 Ending Fund Balance
Bond Reserve 3,632,533 3,632,533 3,632,533 3,632,533 3,632,533 Reserve for Debt Service 9,817,239 9,817,239 9,817,239 7,986,294 9,817,239 Total Ending Fund Balance 13,449,772 13,449,772 13,449,772 11,618,827 13,449,772 Total Use of Funds 25,251,723 29,755,656 29,755,656 28,167,744 29,998,689

117

FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE DEBT SERVICE FUNDS | PUBLIC FACILITIES FINANCING
CORPORATION FUND (431)
2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Beginning Fund Balance
Debt Reserve 707,202 707,202 707,202 707,202 707,202 Unrest
ricted 17,691 18,070 15,881 18,070 13,931 Total Beginning Fund Balance 724,893 725,272 723,083 725,272 721,133 Revenue
Interest 303 2,000 50 2,000 1,000 Total Revenue 303 2,000 50 2,000 1,000 Transfers From
General Fund 2,500,344 2,501,439 2,501,439 1,402,275 1,402,275 Total Transfers From 2,500,344 2,501,439 2,501,439 1,402,275 1,402,275 Total Source of Funds 3,225,540 3,228,711 3,224,572 2,129,547 2,124,408 Expenditures
Debt Service 2,500,344 2,501,439 2,501,439 1,400,375 1,400,275 Administrative Costs 2,113 2,000 2,000 2,000 1,100 Arbitrage Computation 0 0 0 1,900 1,900
Total Expenditures 2,502,457 2,503,439 2,503,439 1,404,275 1,403,275 Ending Fund Balance
Debt Reserve 707,202 707,202 707,202 707,202 707,202 Unrestricted 15,881 18,070 13,931 18,070 13,931 Total Ending Fund Balance 723,083 725,272 721,133 725,272 721,133 Total Use of Funds 3,225,540 3,228,711 3,224,572 2,129,547 2,124,408

118

FY 20 22/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | DEBT SERVICE DEBT SERVICE FUNDS | SEWER UTILITY DEBT SERVICE
FUND (494)
2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Beginning Fund Balance
Debt Reserve 4,663,690 4,663,690 4,916,274 4,663,690 4,916,274 Total Beginning Fund Balance 4,663,690 4,663,690 4,916,274 4,663,690 4,916,274 Revenue
Debt Proceeds 0 18,588,216 18,588,216 0 0
Total Revenue 0 18,588,216 18,588,216 0 0
Transfers From
Sewer Utility Fund 1,432,799 1,889,035 1,889,035 1,889,035 1,889,035 Total Transfers From 1,432,799 1,889,035 1,889,035 1,889,035 1,889,035 Total Source of Funds 6,096,489 25,140,941 25,393,525 6,552,725 6,805,309 Expenditures
Debt Service 1,068,794 1,889,035 1,889,035 1,889,035 1,889,035 Administrative Costs 111,421 0 0 0 0
Total Expenditures 1,180,215 1,889,035 1,889,035 1,889,035 1,889,035 Transfers To
Sewer Utility Capital Fund 0 18,588,216 18,588,216 0 0
Total Transfers To 0 18,588,216 18,588,216 0 0
Ending Fund Balance
Debt Reserve 4,916,274 4,663,690 4,916,274 4,663,690 4,916,274 Total Ending Fund Balance 4,916,274 4,663,690 4,916,274 4,663,690 4,916,274 Total Use of Funds 6,096,489 25,140,941 25,393,525 6,552,725 6,805,309

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FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | TEN -YEAR FINANCIAL FORECAST

TEN- YEAR GENERAL FUND FINANCIAL FORECAST

FORECAST UPDATE

In January 2022 , a Ten-Year General Fund Forecast was prepared comparing anticipated General Fund revenues and expenditures to provide policy makers and the public an updated assessment of the City’s financial health. In the January Forecast, the first two years (FY 2022/23 and FY 2023/24) showed a net General Fund shortfall of $19.6 million, followed by small surpluses in the out-years.

Since the development of the Forecast, staff has continued to refine the revenue estimates and expenditure budget for the General Fund, resulting in minor adjustments. Overall, the forecast over the first two years remains at a shortfall of $19.6 million. The remaining years of the forecast continue to show small surpluses ranging from $0.7 million to $4.0 million in each year as reflected in the chart below.

April 2022 General Fund Forecast Update

Note: The Forecast does not include the cost to address unmet/deferred infrastructure needs, the cost to fully fund public safety equipment replacement, additional contributions to reserves, one-time funding sources, and one-time expenditure needs.

The charges for services and transfers from other funds were slightly adjusted based on revised reimbursements and the latest revenue trends. The out-year growth factors were also slightly revised with minimal overall changes. Expenditures were also slightly revised based on the final position information and non-personnel costs. Overall, there were no substantive changes to the forecast estimates. ($25.0)
($20.0)
($15.0)
($10.0)
($5.0)
$0.0
$5.0
FY
2022/23
Forecast
FY
2023/24
Forecast
FY
2024/25
Forecast
FY
2025/26
Forecast
FY
2026/27
Forecast
FY
2027/28
Forecast
FY
2028/29
Forecast
FY
2029/30
Forecast
FY
2030/31
Forecast
FY
2031/32
Forecast
FY
2032/33
Forecast
$(23.0)
$3.4 $2.6 $1.8
$4.0
$2.4
$0.7
$3.2
$1.3
$2.9 $3.2
Millions
$19.6 M
Shortfall
through FY
2023/24
121

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

Ten-Year
General Fund
Financial Forecast
2023 - 2033

January 2022

122

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

PURPOSE

The Ten-Year General Financial Forecast (Forecast) provides policy makers and the public an updated assessment of the City’s fiscal health. The Forecast includes projections of ongoing General Fund revenues and expenditures for a ten-year period beyond the adopted biennial budget.

The Forecast serves as a strategic planning tool to assist the City Council, staff, and the public with decision-making as they work to adopt the budget and consider long-term financial strategies for the City.

The Forecast also identifies known risk factors and vulnerabilities, and it provides a foundation for evaluating priorities and understanding trade-offs moving forward.

EXECUTIVE SUMMARY

The Forecast compares anticipated General Fund revenues with base expenditures, which include the projected costs of providing the current level of service. Individual projections of revenues and expenditures are developed based on trend analyses, input from available economic reports, consultant recommendations, departments, updated salary and benefit information, and non- personnel costs. The most current information available is incorporated into the Plan and refined on a moving forward basis.

The Forecast compares ongoing revenues and expenditures. It does not factor in one -time funding sources or items funded on a pay-as-you-go method with one-time sources.

The Forecast shows a substantial General Fund shortfall of $23.5 million in FY 2022/23, with improvement in the remaining years of the Forecast. The projected shortfall of $23.5 million is equivalent to 8.9% of forecasted expenditures, while the surpluses in future years of $0.5 million to $3.9 million are relatively small, ranging from 0.2% to 1.4% of expenditures annually. The model assumes shortfalls or surpluses are solved with ongoing actions in each year . To the extent actions are not ongoing, surpluses/deficits would continue in the next fiscal year. It should be noted that as part of the FY 2021/22 and FY 2022/23 Biennial Operating Budget, the City Council approved the use of reserves to balance the budget in FY 2022/23. Because those solutions were on a one-time basis, the ongoing budget deficit needing solutions totals $19.6 million starting in FY 2023/24.

FY 2023-2033 General Fund Ten-Year Financial Forecast
Net Operating Margin - Ongoing Surplus/(Deficit)
($ in millions)
2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 ($23.5M) $3.9M $2.7M $1.8M $3.6M $3.1M $0.5M $3.2M $2.0M $2.6M $3.0M As a percentage of projected operating expenditures
(8.9%) 1.4% 0.9% 0.6% 1.2% 1.0% 0.2% 1.0% 0.6% 0.7% 0.8%

The Forecast does not include the following:
• One-time funding sources and one-time expenditure needs; • The cost to address unmet/deferred capital infrastructure needs; • Revenue and staffing impacts of development projects; and • Additional contributions to Reserves (Budget Stabilization Reserve, Capital Projects Reserve, Pension Reserve).

123

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST Historically, the City has funded many capital infrastructure and equipment needs with one-time funds on a pay-as-you-go basis. The use of one- time funds as the funding mechanism for capital improvements and various equipment that rely on the General Fund creates challenges. The lack of sufficient one-time funding has resulted in a backlog of unmet/deferred infrastructure needs. Staff will continue to evaluate potential options to create capacity to address those funding needs.

In addition to the elements described above that are not factored into the Forecast, the City has identified various risk factors that could have a potential impact on the Forecast. These include:
• More significant impacts from COVID-variants;
• E conomic slowdown/recession;
• State/federal legislative changes and legal challenges; • Labor costs outside the budget assumptions;
• CalPERS actuarial changes or reform actions;
• Unanticipated critical capital/infrastructure needs; and • Maintenance impacts and timing of development projects.

As the City has experienced in the past and with the latest COVID-19 pandemic, General Fund revenues may exceed or fall below expectations based on changes in economic or non-economic conditions. This type of volatility has been seen in the City’s largest General Fund revenues, Property Tax , Sales Tax, and Transient Occupancy Tax (TOT). As a result of the pandemic, TOT receipts have been the most severely impacted. Various cost elements can also vary from year to year, such as retirement costs that are impacted by the earnings assumptions and performance of the California Public Employees Retirement System (CalPERS).

Staff will continue to closely monitor revenue performance and expenditures and will refine the revenue and expenditure figures during the development of the FY 2022/23 Budget. 124

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

ECONOMIC OUTLOOK

National Economy

COVID-19 continues to create uncertainty regarding future economic growth, with the latest Omicron variant potentially impacting the recovery . In 2020, the nation saw record breaking increases in unemployment and declines in economic activity. While these economic indicators have improved significantly since that time, there are certain areas that have not fully recovered.

The December
2021 UCLA
Anderson
Forecast calls for
continued strong
economic growth
and labor market
recovery, with a
lessening of supply
constraints and
inflation. The
Omicron variant
may temporarily
derail this forecast,
but it is too soon to
tell. The UCLA
Anderson Forecast
projects the Gross
Domestic Product
(GDP) to reach its pre-COVID trend by the third quarter 2022. The Forecast also assumes that the economy will add approximately 200,000 to 400,000 jobs per month on average over the coming year, with a potential for some stalling in 2022 depending on the reaction to the Omicron variant. The unemployment rate is also expected to continue to decline. Labor force participation, however, is expected to remain below pre-pandemic levels through the end of 2023

1. In December 2021, two -thirds of the Federal Reserve Federal Open Market Committee members forecasted at least three interest rate hikes in 2022 to fight inflation. The Fed also expects GDP growth of 5.5% in 2021, 4.0% in 2022, and 2.2% in 2023. 2

In December 2021, the U.S. unemployment rate of 3.9% and the number of unemployed persons of 6.3 million were well below the peak in April 2020 but remain slightly above the pre-pandemic levels i n February 2020 (3.5% unemployment and 5.7 million unemployed). 3 1 UCLA Anderson Forecast, December 2021
2 The majority of Fed members forecast three interest rate hikes in 2022 to fight inflation (cnbc.com) , 12/15/2021 3 3 https://www.bls.gov/news.release/pdf/empsit.pdf
Real GDP Levels and Trends, $ Billions
125
City of
Santa Clara
21 ,000
20,500
20,000
111,500
111,000
18,500
18,000
17,500

17.000
2017 2018
Source· UCU .4.nderson Forecast and Oxford Economics
2019
Fmec:aai
2020 2021 2022 2023

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

U.S. economic growth is dependent on consumer spending, which accounts for approximately 70% of the GDP. The Conference Board Consumer Confidence Index declined in January 2022, following an increase in December 2021. “Consumer confidence moderated in January, following gains in the final three months of 2021,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index improved, suggesting the economy entered the new year on solid footing. However, expectations about short -term growth prospects weakened, pointing to a likely moderation in growth during the first quarter of 2022. Nevertheless, the proportion of consumers planning to purchase homes, automobiles, and major appliances over the next six months all increased.” “Meanwhile, concerns about inflation declined for the second straight month, but remain elevated after hitting a 13- year high in November 2021. Concerns about the pandemic increased slightly, amid the ongoing Omicron surge. Looking ahead, both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic.”
4 California Economy

The economy of California is the largest in the United States, and if California were a sovereign nation, it would rank as the world’s fifth largest economy. The California GDP represents almost 15% of the total U.S. economy. California also has the highest GDP per capita of any state in the U.S., followed by Texas and New York.
5 After the State’s largest increase in the unemployment rate in April 2020, the California unemployment rate dropped slightly to 6.5% in December 2021. With the continued addition of jobs, California has now regained 1.95 million jobs, or nearly 72% of the 2.71 million jobs lost due to COVID-19 in March and April 2020.6

4 US Consumer Confidence (conference-board.org)
5 If California Were A Country - Bull Oak Capital
6 https://www.edd.ca.gov/newsroom/unemployment-december-2021.htm 126
City of
Santa Clara
Chart 1. Unemployment rate, seasonally adjusted,
December 2019- December 2021
Percent

16.0 14.0

12.0 10.0

8.0 6.0

4.0 Chart 2. Nonfarm payroll employment, seasonally adjusted, December 2019- December 2021
Thous ands
160,000
155,000
150,000
145,000
140,000
135,000
130,000

2.0 .__.__._,..__.,_........,._..___._..._.__._..,__,_..__._ ____ ~___.._._..._. 125,000 Deo-19 Mar-20 Jun-20 Sep-20 Dec-20 M r-21 Jun-21 Sep-21 Oec-21 Dec-19 Mar-20 Jun-20 Sep-20 Deo-20 Mar-21 Jun-21 Sep..21 Oec-21

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

Despite COVID- 19, the
California housing
market has remained
strong. In California, the
December 2021 median
single-family home
price of $797,000 was
up 11% from the
December 2020 price of
$718,000 and was up
30% from the
December 2019 median
price of $615,000.

Regional Economy

The local economy has also been impacted by COVID -19, with drops in employment and significant impacts to certain businesses. Like the nation and California, unemployment has significantly improved over the past year but still remains slightly above pre-COVID levels.

With an unemployment rate of 3.0% in December
2021, the rate in the San José-Sunnyvale-Santa
Clara Metropolitan Statistical Area (MSA)
continues to track below the State and nation. In
2021, a total of 64,000 jobs, or 6.0%, were added
in the MSA. The largest gain was in the leisure
and hospitality industry (up 24,300), followed by
professional and business services (up 12,700),
private educational and health services (up
9,700), manufacturing (up 6,300), and
information (up 5,500) .
7 7 https://www.labormarketinfo.edd.ca.gov>sjos$pds
Unemployment Rate
(Seasonally Adjusted)
Unemployment Rate
(Not Seasonally Adjusted)
Dec
2019
Dec
2020
Dec
2021
Nation 3.4% 6.5% 3.7%
California 3.7% 8.8% 5.0%
San José-Sunnyvale-Santa
Clara Metropolitan
Statistical Area

2.3% 6.0% 3.0%
Source: California Employment Development
Department, U.S. Bureau of Labor Statistics

$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
California
Median Single Family Home Prices
Source: California Association of Realtors
127

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

Property values in Santa Clara
remain high. In 2021 , the median
price of a single-family home totaled
$1.64 million, which was up from the
2020 level of $1.43 million as shown
in the Single- Family Residential
Home Sales chart. This strong
residential performance has been
experienced throughout the State.

With the highly skilled workforce in
the region, wages in Silicon Valley
are higher than the rest of the Bay
Area and California as shown in the
chart below.

Average Wages
Silicon Valley, San Francisco, Alameda County, Rest of the Bay Area, and California

There are significant development projects underway in Santa Clara that will bring new revenues as well as new costs. The financial impacts of these developments have not been factored into this forecast given the uncertainty regarding the timing. However, it is anticipated that this additional development activity will have a positive impact on the forecast

Data Source: Santa Clara County Association of Realtors

$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
City of Santa Clara
Single Family Residential Home Sales
Ave. Price Med. Price
Data Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment Wages 128
City of
Santa Clara
• Silicon Valley • San Francisco • Alameda County • Rut of Bay Area S 140 ,000
S 120,000
]
t,
~
Sl00,000
"f
C
0 SS0,000
i
~
S.60,000
,:.
~ S40,000
~
<(
$20 ,000
so
'01 '02 '03 '04 'OS '06 '07 '08
1111111111
■ ■
Callforn la
'09 ' 10 '11 '12 '13 '14 '15 '16 '17 ' 19 '20

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

GENERAL FUND OVERVIEW

The Forecast projects a substantial deficit in FY 2022/23, followed by small surpluses in the remaining years. The following table displays the projected General Fund revenues and expenditures for FY 2022/23 and an additional ten years. It also shows the cumulative shortfall and the net operating margin that accounts for the incremental shortfalls and surpluses (assuming each preceding shortfall or surplus is addressed completely with ongoing solutions in the year it appears) for each year of the forecast.

Because it is the City’s goal to remain in balance on an ongoing basis, the incremental figure (Net Operating Margin) is useful in that it shows the additional shortfall or surplus attributed to a particular fiscal year. To the extent that a shortfall is not resolved or a surplus is not expended on an ongoing basis, it is important to understand that the remaining budget gap or surplus will carry over to the following year.

As an example, because the FY 2021/22 shortfall was primarily addressed with one-time federal stimulus funds and reserves, the shortfall carried over to FY 2022/23.

FY 2023-2033 General Fund Ten-Year Financial Forecast
($ in millions)

2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 Projected
Revenues $ 241.4 $ 255.0 $ 268.4 $ 280.6 $ 291.5 $ 301.7 $ 312.9 $ 324.2 $ 335.8 $ 347.9 $ 360.9 Projected
Expenditures $ 264.9 $ 274.6 $ 285.3 $ 295.7 $ 303.0 $ 310.1 $ 320.8 $ 328.9 $ 338.5 $ 348.0 $ 358.0 Annual
(Shortfall)/
Surplus
($ 23.5) ($ 19.6) ($ 16.9) ($ 15.1) ($ 11.5) ($ 8.4) ($ 7.9) ($ 4.7) ($ 2.7) ($ 0.1) $2.9 Net
Operating
Margin
($23.5) $3.9 $2.7 $1.8 $3.6 $3.1 $0.5 $3.2 $2.0 $2.6 $3.0 % of
Expenses (8.9%) 1.4% 0.9% 0.6% 1.2% 1.0% 0.2% 1.0% 0.6% 0.7% 0.8%

General Fund Net Operating Margin

In FY 2022/23, a General Fund shortfall of $23.5 million is projected. This projection is derived by comparing estimated revenues with the cost of delivering existing City services. In the future years of the Forecast, small incremental surpluses ranging from $0.5 million to $3.9 million are projected. By the end of the Forecast period, revenues are projected at $360.9 million while expenditures are estimated at $358.0 million.

129

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST When put into context of the size of the General Fund budget, the shortfall in FY 2022/23 is 8.9% of General Fund expenditures. In the out years of the Forecast, the annual margins are relatively narrow, ranging from 0.2% to 1.4% of the projected annual expenditure budget. The shortfall in FY 2022/23 is primarily the result of the significant declines in revenues associated with COVID-19. In the out years of the Forecast, revenues are anticipated to grow at a moderate pace that would keep pace with the growth in base expenditures after the FY 2022/23 shortfall is addressed.

It is important to note that the base expenditures do not factor in several cost elements that are currently funded on a pay -as-you-go basis with one- time funds, including the following: the cost to fund capital improvements that rely on General Fund funding; the cost to address unmet/deferred infrastructure needs; the cost to fully fund public safety equipment replacement; and additional contributions to the Budget Stabilization Reserve, the Capital Projects Reserve, and the Pension Stabilization Reserve.

The revenue projections assume a moderately growing economy, but do not include project specific revenues that may result from several large commercial and residential development projects currently under review or entitled but not yet under construction. If any of the development projects are completed and yield positive economic benefit, the outlook would improve.

FY 2023-2033 General Fund Ten-Year Financial Forecast
Net Operating Margin (Incremental Shortfalls/Surpluses)

$(25.0)
$(20.0)
$(15.0)
$(10.0)
$(5.0)
$-
$5.0
FY
2022/23
Forecast
FY
2023/24
Forecast
FY
2024/25
Forecast
FY
2025/26
Forecast
FY
2026/27
Forecast
FY
2027/28
Forecast
FY
2028/29
Forecast
FY
2029/30
Forecast
FY
2030/31
Forecast
FY
2031/32
Forecast
FY
2032/33
Forecast
$(23.5)
$3.9 $2.7 $1.8
$3.6 $3.1
$0.5
$3.2 $2.0 $2.6 $3.0
Millions
$19.6 million
ongoing deficit
starting in FY
2023/24
130

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

GENERAL FUND REVENUES

There are several General Fund revenue sources supporting the City’s activities as shown in the table below.

FY 2023-2033 General Fund Revenue Sources
($ in millions)
2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 $ m $ m $ m $ m $ m $ m $ m $ m $ m $ m $ m
Property Tax

$75.3 $79.2 $83.3 $87.7 $92.2 $97.1 $102.1 $107.5 $113.1 $119.0 $125.3 Sales Tax

$60.2 $62.8 $64.8 $66.8 $69.4 $71.5 $73.3 $75.1 $77.0 $78.9 $81.0 Transient
Occupancy
Tax
$12.6 $16.4 $19.7 $21.6 $22.7 $23.6 $24.6 $25.5 $26.6 $27.6 $28.7 Franchise
Tax

$4.8 $5.1 $5.3 $5.4 $5.6 $5.7 $5.9 $6.1 $6.3 $6.5 $6.7
Documentary
Transfer Tax

$1.5 $1.5 $1.5 $1.6 $1.6 $1.6 $1.7 $1.7 $1.7 $1.8 $1.9
Licenses and
Permits

$3.6 $3.7 $3.7 $3.8 $3.9 $4.0 $4.1 $4.2 $4.2 $4.4 $4.4
Fines and
Penalties

$1.4 $1.6 $1.6 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7
Interest
Income

$2.5 $3.1 $3.7 $4.3 $4.4 $4.5 $4.6 $4.8 $4.9 $5.1 $5.2
Rents and
Leases

$11.3 $13.5 $14.8 $15.9 $16.5 $16.5 $17.3 $18.0 $18.6 $19.0 $19.6 Other
Services
Fees
$38.3 $39.0 $39.8 $40.7 $41.4 $42.3 $43.2 $44.1 $45.0 $46.0 $47.2 Transfers
from Other
Funds
$3.3 $1.6 $1.7 $1.7 $1.7 $1.7 $1.8 $1.8 $1.8 $1.8 $1.9
SVP Transfer $26.2 $27.1 $28.1 $29.0 $30.0 $31.1 $32.2 $33.3 $34.5 $35.7 $36.9 All Other
Revenues

$0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4
Total
Sources

$241.4 $255.0 $268.4 $280.6 $291.5 $301.7 $312.9 $324.2 $335.8 $347.9 $360.9 % Change
from Prior
Yr

5.6% 5.3% 4.5% 3.9% 3.5% 3.7% 3.6% 3.6% 3.6% 3.7%
131

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

Sales tax and property tax comprise the largest individual sources of General Fund revenues, representing a combined $135.5 million in FY 2022/23, or over 50% of the total. These categories along with Transient Occupancy Tax are economically sensitive and account for approximately 60% of the General Fund revenues.

Following is a discussion of the major General Fund revenue categories:

Property Tax

The Property Tax category includes Secured and Unsecured Property Taxes. The County of Santa Clara Office of the Assessor and the Controller -Treasurer Department meets quarterly with cities to review property tax revenue allocated to Santa Clara County cities. The Controller -Treasurer Department provides projections on the current year property tax receipts, including updates on the assessed valuation and estimates on anticipated adjustments made from property tax appeals. The current year estimates are used as the starting point in the forecast. The County Assessor’s Office also provides information to cities on a monthly basis on the status of the assessment roll for the upcoming year.

In FY 2022/23, property tax revenue is projected at $75.3 million and includes secured property tax of $72.4 million and unsecured property tax of $2.9 million. Assessed valuation growth on secured property is projected at 5.0% and reflects the annual inflation factor based on Consumer Price Index (2% increase in FY 2022/23), growth due to property sales, and a general allowance for new construction projects being added to the tax rolls. In the remaining years of the forecast, annual assessed valuation growth of Property Tax,
$75.3 M, 31.2%
Sales Tax,
$60.2 M,

24.9%
Transient
Occupancy Tax,
$12.6 M, 5.2%
Charges for
Services,
$38.3 M,

15.9%
Contribution In-
Lieu, $26.2 M,

10.9%
Other Revenue,
$28.8 M, 11.9%
FY 2022/23 General Fund Revenues
($241.4 million)
$148.1 M or
61% of
General
Fund
Revenue
132

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

5.5% is projected. In order to meet these growth projections, developments with assessed valuation between $700 million to $1 billion would need to continue annually. By the end of the forecast period, Property Tax receipts are projected to reach $125.3 million.

Secured Property Tax receipts include general secured property tax along with supplemental property tax (retroactive collections back to the point of sale for reassessments of value due to property resale), residual Redevelopment Agency (RDA) receipts, and excess Educational Revenue Augmentation Fund (ERAF) funds (under Proposition 98, a portion of property tax receipts are allocated to the ERAF beginning in 1992 and once there are sufficient funds in ERAF to fulfill the obligation to the school districts, excess funds are returned to the taxing entities that contributed the funding). Overall, Secured Property Tax receipts are expected to increase 4.8% in FY 2022/23, and 5.3% in FY 2023/24 and the remaining years of the Forecast. The Forecast assumes $3.7 million from ERAF, which is lower than prior years as the County has indicated that approximately 30% of the ERAF receipts are considered high risk due to disputes regarding the allocation of these funds.

Unsecured Property Tax receipts are projected to increase 1% in FY 2022/23 followed by 3% annual growth in FY 2023/24 and the remaining years of the Forecast.

Collections are expected to grow at an average annual rate of 5.3% over the forecast period.

Note: FY 2013/14 includes a one-time $6.1 million amount due to Redevelopment Agency dissolution $0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
Millions
Property Tax
133
City of
Santa Clara
-
I
I
I
I
I
I

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST Sales Tax

Santa Clara’s sales tax collections are directly influenced by local, regional, national and international economic and business cycles. Therefore, sales tax collections are one of the most economically sensitive General Fund revenue sources. These collections have been impacted by COVID-19 and are expected to improve in FY 2022/23 and continue to growth throughout the forecast period.

As shown in the chart below, sales tax collections are expected to total $58.3 million in FY 2021/22 and increase 3.3% to $60.2 million in FY 2022/23 based on the assumption that sectors that have been deeply impacted by COVID -19 will continue to improve with the lifting of pandemic -related restrictions. The growth rates are expected to range from 2.4% to 4.4% in the out years of the forecast as the sales tax growth rates normalize over this period. Based on these projections, annual collections will reach $81.0 million by FY 2032/33. These projections are based on information provided by the City’s sales tax consultant, Avenu Insights & Analytics. Their estimates incorporate individual category/segment projections with adjustments for known individual business anomalies such as missed payments or misallocations.

Collections are expected to grow at an average annual rate of 3.0% over forecast period.

Note: FY 2016/17 includes a one-time true-up payment due to the unwinding of the State’s Triple Flip.

$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
Millions
Sales Tax
134
City of
Santa Clara
- f-
- f--
- f--
- r
- f--
- f- - I-- - I-

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST To provide context on how the City generates its sales tax revenues and the performance in recent years, the chart below breaks out the sales tax per capita for the third quarter of each calendar year for the past five years, adjusted for inflation. The COVID-19 related impacts are reflected starting in the third quarter 2020 data with declines in General Retail, Food Products (includes restaurants), and Transportation. As shown in the chart, the City’s largest sector is Business -to-Business, which continues to provide the foundation for the City’s tax base.

Transient Occupancy Tax

Transient Occupancy Tax (TOT) is calculated as a percentage of City hotel/motel room charges. The City's current TOT rate is 11.5%. This rate increased from 9.5% to 11.5% effective January 1, 2022 as approved by the City Council on October 19, 2021. This implemented one- half of the up to four percentage point increase approved by the voters in November 2020. As with sales tax, TOT is sensitive to business cycles and can vary greatly from year to year based on occupancy levels and room rates.

Prior to COVID-19, this category had experienced tremendous growth as shown in the TOT chart on the following page. With the COVID-19 safety restrictions, TOT receipts plummeted at the end of FY 2019/20 through FY 2020/21. Collections in FY 2021/22 remain well below pre-COVID levels. For instance, from July through December 2021, TOT receipts were down 66% from the same period in 2019. Of all the City’s revenue categories, TOT has seen the most significant declines as a result of the pandemic.

135
City of
Santa Clara
Santa (Iara
Ann ual Per capita Sales Tax
Adju.sted tor lnfla ion
(Constant 2017 $)
■ Ge nera l Retail
Food Prod u ct s
■ Trans:pon ation
■ Constrn ction
■ Bus iness To lh1s in ess
■ MlSce l la n-eo us
■ Cou nty Poo l
(Cash Basis)
20ll7Q.3 :$438 2018Q3 $436 2019Q3, $432 W 20Q3 :$367 2-021Q3 :$365

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST In FY 2018/2019, the last full year not impacted by COVID -19, TOT receipts totaled $22.5 million. TOT revenue dropped to $2.9 million in FY 2020/21 and is estimated at $8.0 million to $9.0 million in FY 2021/22, gaining some of the lost ground due to COVID-19. TOT receipts are projected to continue to improve over the forecast period with an increase to $12.6 million in FY 2022/23 as this sector continues to recover from the COVID-19 impacts, followed by growth ranging from 30% to 4% annually over the forecast period. By the end of the Forecast period, TOT receipts are projected to reach $28.7 million.

It is difficult to project the post-COVID environment in terms of business travel and the associated hotel usage. Silicon Valley has traditionally been a mid-week market, reliant on business travel supported by the many high technology industries. In April 2020, Silicon Valley experienced a roughly 85% - 95% decline in the revenue per available room (RevPAR). While demand has increased, RevPAR in the region remains approximately 60% - 70% below pre-pandemic levels. According to projections by HVS, full recovery is not projected until 2024/25. 8 In the Forecast, TOT collections are expected to improve from the shock to the system caused by COVID-19, but receipts are expected to remain well below levels that were projected pre -COVID as illustrated in the chart below (the pre -COVID forecast assumed an economic slowdown followed by growth).

8 https://www.hotel-online.com/press_releases/release/covid-19s-impact-on-the-silicon-valley-lodging- market/

$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
Millions
Transient Occupancy Tax
Pre-COVID Forecast
136
City of
Santa Clara
l.111

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST Franchise Tax and Documentary Transfer Tax

Other Taxes include the Franchise Tax and Documentary Transfer Tax . The Franchise Tax revenues are projected at $4.8 million in FY 2022/23 with annual 3% increases in the out years of the Forecast.

The Documentary Transfer Tax, which is imposed on the transfer of the title of real property, is projected at $1.5 million in FY 2022/23 with 2% annual increases in the out years of the Forecast.

Licenses and Permits

Licenses and Permits are projected to total $3.6 million in FY 2022/23, including fire permits at $2.1 million, business licenses at $900,000, parking permit at $525,000, and encroachment and miscellaneous permits at $60,000. Average annual growth of 2.1% is projected in the out years of the Forecast, with revenues reaching $4.4 million in FY 2032/33. Starting in FY 2021/22, the building development-related permits are reflected in a separate Building Development Services Fund.

Fines and Penalties

Fines and Penalties are projected to total $1.5 million in FY 2022/23 and increase to $1.7 million by FY 2032/33. This Forecast assumes late charges, which had been suspended in response to COVID-19, will resume by FY 2022/23.

Interest Income

The City invests all funds not needed for current cash requirements in accordance with the City Council- approved Investment Policy. These funds are invested in securities having a maximum maturity of seven years. Factors that directly influence General Fund interest income include prevailing interest rates, the size of the portfolio and the relative percentage of the portfolio allocated to the General Fund. Based on projected interest rates and cash balances, the General Fund is expected to receive $2.5 million in interest in FY 2022/23. This figure excludes the restricted interest earnings associated with the Pension Stabilization Reserve that must be allocated to that reserve. In the remaining years of the Forecast , interest earnings are projected to fluctuate annually primarily due to interest rate assumptions, ranging from $3.1 million to $5.2 million.

Rents and Leases

Rents and Leases includes property rents and leases as well as right-of-way rental fees charged to water sewer and utilities. In FY 2022/23, Rents and Leases revenue is estimated to total $11.3 million, including $7.1 million from property rents and leases and $4.2 million from right-of-way rental fees. This category factors in projected lease revenue from the Related project (increasing from $625,000 to $5.2 million) as well the Commerce and Peddlers Plaza (net revenue of $500,000 through FY 2026/27). Growth projections for the out years of the Forecast are based on individual lease agreements. Rents and Leases revenue is projected to reach $19.6 million by FY 2032/33.

Other Services Fees

The Other Services Fees category includes fees charged for various City services provided by the Community Development, Fire, Police, Parks and Recreation, and Public Works Departments as well as cost allocation plan reimbursements and stadium-related reimbursements. This category is estimated to generate $38.3 million in FY 2022/23 and assumes continued improvement in categories that have been 137

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST heavily impacted by COVID-19, most notably stadium-related reimbursements and parks and recreation fees. As presented in the FY 2021/22 and FY 2022/23 Adopted Operating Budget, it is also assumed that additional fee revenue of $0.5 million will be generated based on the fee study underway. Over the Forecast period, average annual growth of 2.1% is projected, resulting in collections of $47.2 million by FY 2032/33.

Transfers from Other Funds

The Transfers In from Other Funds totals $3.3 million in FY 2022/23 and includes the following: a transfer of $1.4 million from the Storm Drain Capital Fund to support storm drain operations; a one-time transfer of $1.0 million from the Vehicle Replacement Fund to return funding no longer needed for planned vehicle replacements as these vehicles will be replaced with electric vehicles under the SVP program; a one- time transfer of $0.7 million from the electric Utility Fund to support a new City Attorney position added to support SVP and two Finance positions that support SVP operations (these positions will be factored into the cost allocation plan starting in FY 2023/24); and a transfer of $0.2 million from the Building Development Services Fund to cover a portion of the Code Enforcement costs that support development activity. In the out years of the Forecast, the transfers range from $1.6 million to $1.8 million and include the transfers from the Storm Drain Capital Fund and the Building Development Services Fund.

Silicon Valley Power Transfer

In accordance with the City’s charter, Silicon Valley Power pays 5.0% of gross revenues to the General Fund. For FY 2022/23, contributions are projected to total $26.2 million, an increase of 3.5% from the FY 2021/22 estimate of $25.3 million. It is anticipated that revenues will increase to $ 36.9 million by FY 2032/33, increasing at an annual rate of 3. 5%. Growth in this category is primarily driven by market projections for electric consumption, resources costs, and any retail rate increase assumed for the Electric Utility.

138
FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

GENERAL FUND EXPENDITURES
Expenditures are projected to grow from $264.9 million in FY 2022/23 to $358.0 million by the end of the forecast period. FY 2022/23 expenditures are below the FY 2021/22 Adopted Budget of $286.0 million primarily due to the elimination of one-time transfers in FY 2021/22.

FY 2023-2033 General Fund Expenditures
($ in millions)
2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 $ m $ m $ m $ m $ m $ m $ m $ m $ m $ m $ m
Salaries 128.2 133.5 138.4 142.9 147.1 151.4 155.8 160.1 164.6 169.5 174.6 Retirement 55.9 58.6 61.2 62.9 62.5 63.6 66.3 67.8 69.1 71.2 73.4 Other
Benefits

20.2 20.9 21.7 22.4 23.1 23.9 24.5 25.1 26.0 26.9 28.0
Sub-Total
Labor Costs
204.3 213.0 221.3 228.2 232.7 238.9 246.6 253.0 259.7 267.6 276.0 Materials,
Services,
Supplies

30.0 30.7 32.3 33.8 35.7 35.8 37.8 38.5 40.3 41.4 42.6
Interfund
Services

24.7 24.7 25.4 27.2 28.0 28.7 29.6 30.4 31.3 32.2 33.2
Capital
Outlay

0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Loans and
Transfers

5.7 6.0 6.1 6.3 6.4 6.5 6.6 6.8 7.0 6.6 6.0
Reserves 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Sub-total
Other Costs

60.6 61.6 64.0 67.5 70.3 71.2 74.2 75.9 78.8 80.4 82.0
Total Uses 264.9 274.6 285.3 295.7 303.0 310.1 320.8 328.9 338.5 348.0 358.0 % Change
from Prior Yr

3.7% 3.9% 3.6% 2.5% 2.3% 3.5% 2.5% 2.9% 2.8% 2.9%
139

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

Labor Costs

Labor costs, which include salary, retirement and other benefit costs, are projected at $204.3 million in FY 2022/23. These costs are derived from a position-level analysis of City staffing, including actual salary and benefit information, negotiated salary and benefit adjustments for bargaining groups that have current Memorandums of Understanding with the City, projected adjustments for the out years of the forecast, and retirement information from the California Public Employees Retirement System (CalPERS) and the City’s actuary.

Over the Forecast period, these costs are projected to increase an average of 3.1% annually and reach $276.0 million by FY 2032/33.

Retirement Costs

Retirement costs represent one of the largest components of labor costs. The City contributes to CalPERS, which provides a defined benefit plan for participating public entities within the State of California. CalPERS offers a menu of benefit provisions that are established by State statutes within the Public Employee Retirement Law. The City selected its benefit provisions from the benefit menu by contract with CalPERS and adopted those benefits through local ordinance, following negotiations with employee bargaining groups.

Salaries, $128.2 M,

48.4%
Benefits, $76.1 M,

28.7%
Non-
Personnel/Other,
$60.6 M, 22.9%
$204.3 M or

77.1% of
General
Fund
Expenditures
FY 2022/23 General Fund Expenditures by Type

140

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST CalPERS retirement costs rose sharply over the past decade as a result of the market losses in the early 2000s followed by benefit enhancements in the mid-2000s. In FY 2011/12, General Fund pension costs were $18.9 million; by FY 2022/23, pension costs are projected to be $55.9 million. Retirement payments are expected to continue to rise as required employer rate increases are rolled in to make up for investment losses, a lower investment return assumption, shorter smoothing and amortization periods, and other demographic assumption changes. By the end of the Forecast period, PERS expenditures are projected to reach $73.4 million and will account for an estimated 21% of General Fund expenditures.

On December 21, 2016, the CalPERS Board approved lowering the investment earnings assumption (discount rate) downward from 7.5% to 7.0% over a three -year period. This change increased rates beginning in Fiscal Year 2018/19, with the full impact to be realized in FY 2024/25. In February 2018, the CalPERS Board approved shortening the period over which actuarial gains and losses are amortized from 30 years to 20 years for new pension liabilities. This policy became effective as of the June 30, 2019 CalPERS actuarial valuations. Additional actions will likely be implemented in the future as part of a risk mitigation strategy to move to more conservative estimates over time to reduce volatility, including additional downward revisions to the discount rate.

Year-by-year pension rate projections are shown below. These projections incorporate rates provided by CalPERS for FY 2022/23 through FY 2027/28. In the remaining years of the Forecast, the retirement costs are based on rates provided by the City’s actuary.

$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Millions
General Fund PERS Costs
Safety Miscellaneous
141
City of
Santa Clara
■ ■

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST Materials, Services and Supplies

The materials, services and supplies estimate for FY 2022/23 is $30.0 million, which is above the FY 2021/22 Adopted Budget level of $27.9 million and reflects anticipated increases in costs as well as those that occur every other year, such as election costs. Expenditures are projected to reach $42.6 million by FY 2032/33.

Interfund Services

Interfund services include the General Fund contribution to several internal service funds, including Communications Acquisitions, Fleet Operations, Information Technology Services, Special Liability Insurance, Unemployment Insurance, Vehicle Replacement, and Workers’ Compensation. In FY 2022/23, these costs are estimated at $24.7 million and increase to $33.2 million by FY 2032/33. These estimates are based on an evaluation of the activity levels in each internal service fund.

Loans and Transfers

This category includes debt service payments, transfers to the Cemetery Fund, transfers to capital funds for Public Works Capital Project Management, and the City’s contributions to parking maintenance and Convention Center maintenance. These costs are estimated at $5.7 million in FY 2022/23 and total $6.0 million in FY 2032/33.

Reserves

This category includes the contributions to the Technology Reserve to account for the difference between the forecasted revenues and expenditures. Because forecasted revenues are above the forecasted expenditures in each year of the Forecast, the differences are set aside in reserve. These contributions total $0.1 million in FY 2022/23 and the out years of the Forecast.

142

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

RESERVES

Reserves have generally been established with one- time funds and, with the exception of funding set aside in the Technology Reserves to maintain 100% cost recovery, are not reflected in the Forecast figures. Reserves, however, are an important component of the budget. Following is a discussion of the major General Fund Reserves.

Budget Stabilization Reserve: During FY 1985/86, the City Council established a policy regarding use of the City’s General Contingency Reserve funds. Under that policy, two separate reserves were established, a Budget Stabilization Reserve (formerly known as the Working Capital Reserve) and a Capital Projects Reserve. The Budget Stabilization Reserve (BSR) is set aside to protect vital General Fund services through economic downturns, emergency financial crisis, or disaster situations. The reserve target is equal to the expenditures of the City’s General Fund operations for three months (90 - days or 25% of budgeted appropriations). When the FY 2021/22 and FY 2022/23 Operating Budget was adopted, the City Council approved an exception to the 25% BSR target level to addr ess the impacts associated with COVID-19, allowing the reserve to drop to 15% of expenditures. The Council -approved Budget Principles for FY 2022/23 also allow the Reserve level to be set at a minimum of 15% of expenditures with any remaining FY 2022/23 shortfall to be addressed with the use of the Land Sale Reserve. The BSR reserve level currently totals $53.9 million and drops to $36.6 million in the FY 2022/23 Adopted Budget. To meet the 15% reserve target, the reserve will need to be increased to an estimated $39.7 million and will require the use of the Land Sale Reserve to cover the increase.

Capital Projects Reserve: This reserve is set aside to fund the portion of the City’s Capital Improvement Program (CIP) that has no other funding sources to support it. The projects funded from this critical reserve provide basic City infrastructure and quality facilities. The Council adopted a policy in FY 1996/97 to maintain a minimum of $5.0 million in the Capital Projects Reserve. The Capital Projects Reserve currently totals $5.0 million.

Land Sale Reserve: This reserve sets aside proceeds from land sales to be used for land- related purposes or other General Fund needs as determined by the City Council. This reserve currently totals $23.6 million.

Pension Stabilization Reserves: These reserves in the General Fund and other City funds have targeted contributions that would fund 1% of the City’s unfunded pension liability annually to address the City’s pension unfunded accrued liability. For the General Fund, this reserve currently totals $24.0 million.

143

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST FY 2022/23 BUDGET PRINCIPLES

On February 8, 2022, the City Council approved the following FY 2022/23 Budget Principles that provide a framework for the budget process.

Budget Principles for 2022/23

1. Make decisions within the context of the City’s Code of Ethics and Values, especially being Fiscally Responsible, Communicative, and Service-Oriented.

2. Consider budget decisions with long-term implications taking into account data from the Ten-Year Financial Forecast.

3. To the extent possible, align ongoing expenditures with ongoing revenues to avoid negative impacts on future budgets and maintain the City's high financial management standards.

5. Continue cost control measures until the ongoing General Fund revenues and expenditures are in alignment.

7. Focus on projects and services that benefit the community as a whole.

8. Pursue economic development objectives and strategies to foster new public and private investment within Santa Clara, and to create employment opportunities.

9. Balance between compensation adjustments to retain and attract employees and funding for positions.

10. Use one-time unrestricted revenues (e.g., annual General Fund surplus) for one -time uses such as increasing reserves, funding capital or Information Technology projects, paying off debt, and/or paying off unfunded pension or other post-employment benefits liabilities.

12. With limited exceptions, establish fees based on full cost recovery whe re individuals/businesses rather than the community at -large are benefitting from City services. This preserves limited unrestricted resources for providing services that benefit the community as a whole.

14. Explore expanding existing revenue sources and/or adding new revenue sources. 144

FY 2023- 2033 TEN -YEAR GENERAL FUND FINANCIAL FORECAST

15. Engage employees to contribute new and innovative ideas during the department budget development process.

16. Use the General Plan as a primary long-term fiscal planning tool and link ability to provide City services to development policy decisions.

CONCLUSION

The Forecast provides policy makers, the public, and City staff an updated assessment of the City’s financial condition that considers the latest projections of economic conditions. It serves as a starting point in the budget development process by providing the necessary context for making budget decisions.

The Forecast also identifies known risk factors and vulnerabilities, and it provides a foundation for evaluating priorities and understanding trade-offs moving forward.

As reflected in this Forecast, the City’s financial condition has dramatically changed as a result of COVID-

19. A General Fund shortfall of $23.5 million is projected for FY 2022/23, followed by small surpluses ranging from $0.5 million to $ 3.9 million annually. By the end of the Forecast period, revenues are projected at $360.9 million while expenditures are estimated at $358.0 million. When put into context of the size of the General Fund budget, the shortfall in FY 2022/23 is 8.9% of General Fund expenditures.

In the out years of the Forecast, the annual margins are relatively narrow, ranging from 0.2% to 1.4% of the projected annual expenditure budget. The Adopted FY 2021/22 and FY 2022/23 Biennial Operating Budget included a budget balancing strategy that relied on a combination of expenditure reductions, revenue solutions, and use of reserves. The use of ongoing and one -time solutions balanced the competing goals of aligning ongoing revenues and expenditures and minimizing the service delivery impacts to the community. This also allowed for time to evaluate the post COVID-19 recovery. Additional budget balancing actions are expected to be brought forward in the FY 2023/24 and FY 2024/25 Biennial Operating Budget that will be adopted in June 2023.

In addition to the projected General Fund shortfall identified in this Forecast, there are elements of the City’s budget that are not included in the Forecast as they have been funded pay -as-you-go with one- time sources. These include the costs to fund capital improvements that rely on General Fund funding, address unmet/deferred infrastructure needs, fully fund public safety equipment replacement, and make additional contributions to reserves. The Forecast also does not incorporate the financial impacts of new developments that may have a positive impact given the uncertainty regarding the timing. This Forecast serves as a strategic planning tool to meet the City’s long-term goal to plan for additional fiscal capacity and bring forward sustainable funding strategies to address these unmet cost elements. This may include new and/or revised revenue options and impact fees in the future.

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Statements of Sources
and Uses of Funds
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General Fund
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FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | STATEMENT OF SOURCES

AND USES OF FUNDS

GENERAL FUND

The General Fund is the primary fund of the City that is used to account for all revenues and expenses that are not restricted by law or policy to be accounted for in another fund. The General Fund supports many of the most visible and essential City services including libraries, parks, police, and fire protection.

The General Fund also includes many departments that provide central services including the City Manager, City Attorney, City Clerk, Mayor and City Council, Finance, and Human Resources offices and departments.

General Fund Sources

General Fund sources total $359.8 million in the FY 2022/23 Amended Budget and consist of $117.7 million in fund balance estimated to be carried over from FY 2021/22, $238.5 million in revenue, and $3.6 million in transfers from other funds. As part of the budget process, estimates are developed for each line item, taking into consideration activity projections, historical trends, and the economic environment . The table below summarizes the projected sources of General Fund revenues and transfers in this budget.

Funding Source
FY 2020/21
Actual
FY 2021/22
Amended
FY 2021/22
Estimate
FY 2022/23
Adopted
FY 2022/23
Change
FY 2022/23
Amended
Property Tax 68,772,921 71,559,000 71,646,000 74,989,000 272,000 75,261,000 Sales Tax 56,178,097 58,183,000 58,250,000 60,959,000 (786,000) 60,173,000 Transient Occupancy
Tax 2,949,235 9,000,000 9,000,000 12,600,000 0 12,600,000 Franchise Tax 4,322,635 4,630,000 4,630,000 4,780,000 0 4,780,000 Documentary Transfer
Tax 1,501,174 1,450,000 1,450,000 1,479,000 1,000 1,480,000 Licenses and Permits1 12,137,804 3,685,000 3,685,000 3,773,000 (176,000) 3,597,000 Rents and Leases 9,154,034 10,015,522 10,015,522 11,840,983 (504,217) 11,336,766 Other Services Fees1 35,239,038 36,949,512 36,949,512 38,559,499 62,746 38,622,245 State/Other Agencies 2,722,419 614,000 614,000 284,000 26,000 310,000 Fines and Penalties 421,088 1,496,135 500,000 1,534,089 (69,089) 1,465,000 Interest 5,616,800 2,600,000 2,600,000 2,266,000 266,000 2,532,000 SVP Transfer 24,548,225 24,700,000 25,285,000 25,565,000 605,000 26,170,000 Other Revenue 6,732,356 198,000 250,000 150,000 0 150,000 Revenue Subtotal 230,295,826 225,080,169 224,875,034 238,779,571 (302,560) 238,477,011 Transfers In 10,399,855 5,303,352 8,267,499 3,297,113 284,261 3,581,374 Total Revenues/
Transfers 240,695,681 230,383,521 233,142,533 242,076,684 (18,299) 242,058,385

1 Beginning in FY 2021/22, b uilding development revenues have been shifted to a new Building Development Fund.

The largest economically sensitive revenue categories (p roperty tax, sales tax, and transient occupancy tax) account for approximately 60% of General Fund revenues. Following is a discussion of these categories as well as other major General Fund revenue categories.

151

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | STATEMENT OF SOURCES

AND USES OF FUNDS
Property Tax

Property tax is the largest revenue
source for the City , representing
approximately 30% of revenues. Under
Proposition 13, the assessed valuation
of properties held by the same owner
from year to year is adjusted each year
by the lesser of 2.0% or the percent
change in the annual California
Consumer Price Index (CCPI). For FY
2022/23, the adjustment factor based
on CCPI is 2.0%. Beyond the inflation
adjustment, growth in property tax
receipts is driven by reassessments
upon the sale of properties and new
construction projects being added to
the tax rol ls. Overall, p roperty tax
revenue for FY 2022/23 is projected at
$75.3 million, up 5.2% from FY 2021/22
estimate of $71.6 million.

Secured Property Tax receipts are projected to total $72.4 million, an increase of 4.8% from the FY 2021/22 year-end estimate of $69.0 million. The category includes general secured property tax (tax on real property that includes the land and the improvements attached to it, such as a home or building) along with supplemental property tax (retroactive collections back to the point of sale for reassessments of value due to property resale), residual Redevelopment Agency receipts, and excess Educational Revenue Augmentation Fund (ERAF) funds (under Proposition 98, a portion of property tax receipts are allocated to the ERAF and once there are sufficient funds in ERAF to fulfill the obligation to the school districts, excess funds are returned to the taxing entities). General secured property tax for FY 2022/23 is based on the assessed value as of January 1, 2022. Assessed valuation growth on secured property is projected at 5.0% in FY 2022/23 and reflects 2.0% annual inflation, growth due to property sales, and an allowance for new construction projects.

Unsecured Property Tax is assessed on personal property that is tangible or moveable and is not attached to real estate (e.g., office equipment, planes, boats). Unsecured Property Tax receipts are projected to total $2.9 million in FY 2022/23.

Santa Clara
Unified School
District, $38.36 County of
Santa Clara,
$18.71
County Office
of Education,
$3.97
City of Santa
Clara, $10.19
West Valley
College, $11.09
Other Special
Districts, $2.51
ERAF (Other
School
Districts),
$15.17
Property Tax Distribution per $100 Collected
152

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | STATEMENT OF SOURCES

AND USES OF FUNDS
Sales Tax

Sales tax is the General Fund’s second largest
revenue. The City's current sales tax rate is 9%,
of which the City of Santa Clara receives 1%.

Santa Clara’s sales tax collections are directly
influenced by local, regional, national , and
international economic and business cycles and
are therefore one of the most volatile General
Fund revenues. These collections have been
negatively impacted by COVID -19 but are
expected to continue to improve in FY 2022/23.

Sales tax collections are expected to total $58.3
million in FY 2021/22 and increase 3.3% to $60.2
million in FY 2022/23, based on the assumption
that sectors that have been deeply impacted by
COVID-19 will improve with the lifting of
pandemic-related restrictions.

Transient Occupancy Tax

Transient Occupancy Tax (TOT) is calculated as a percentage of City hotel/motel room charges. The City's TOT rate is 11.5% as of January 2022. As with sales tax, TOT is sensitive to business cycles and can vary greatly from year to year based on occupancy levels and room rates. Prior to COVID -19, this category had experienced tremendous growth. With the implementation of COVID-19 safety restrictions, TOT receipts plummeted at the end of FY 2019/20 and through FY 2020/21. Collections in FY 2021/22 remain well below pre-COVID levels. For instance, from July through December 2021, TOT receipts were down 66% from the same period in 2019. Of all the City’s revenue categories, TOT has seen the most significant declines as a result of the pandemic.

In FY 2018/2019, the last full year not impacted by COVID -19, TOT receipts totaled $22.5 million. TOT revenue dropped to $2.9 million in FY 2020/21 and is estimated at $9.0 million in FY 2021/22, gaining some of the lost ground due to COVID -19. TOT receipts are projected to continue to improve over the forecast period with an increase to $12.6 million in FY 2022/23 as the hotel/motel sector continues to recover from the COVID -19 impacts. Adjustments to the TOT revenue estimate will likely be necessary based on the actual recovery timeline.

Franchise Tax and Documentary Transfer Tax

The Franchise Tax revenues are projected at $4.8 million in FY 2022/23. The Documentary Transfer Tax, which is imposed on the transfer of the title of real property, is projected at $1.5 million in FY 2022/23.

Licenses and Permits

Statewide Sales Tax,
$6.00
County
Transportation/VTA,
including Measure B
and BART, $1.875
Santa Clara County –
General Purpose,
$0.125
City of Santa
Clara, $1.00
Sales Tax on $100 purchase
153

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | STATEMENT OF SOURCES

AND USES OF FUNDS
Rents and Leases

The Rents and Leases category includes property rents and leases as well as right -of-way rental fees charged to water sewer and utilities. In FY 2022/23, Rents and Leases revenue is estimated to total $11.3 million, including $7.1 million from property rents and leases and $4.2 million from right-of-way rental fees.

This category factors in projected lease revenue from the Related project ($625,000 in FY 2022/23) as well the Commerce and Peddlers Plaza (net revenue of $500,000 through FY 2026/27).

Other Services Fees

The Other Services Fees category includes fees charged for various City services provided by the departments of Community Development, Fire, Police, Park s and Recreation, and Public Works Departments as well as cost allocation plan reimbursements and stadium -related reimbursements. This category is estimated to generate $38.6 million in FY 2022/23 and assumes continued improvement in categories that have been heavily impacted by COVID-19, most notably stadium-related reimbursements and parks and recreation fees.

Silicon Valley Power Transfer

In accordance with the City’s charter, Silicon Valley Power pays 5.0% of gross revenues to the City’s General Fund. For FY 2022/23, contributions are projected to total $26.2 million, an increase of 3.5% from the FY 2021/22 estimate of $25.3 million.

Transfers In

The Transfers In from Other Funds totals $3.6 million in FY 2022/23 and includes a transfer of $1.4 million from the Storm Drain Capital Fund to support storm drain operations; a one- time transfer of $1.0 million from the Vehicle Replacement Fund to return funding no longer needed for planned vehicle replacements as these vehicles will be replaced with electric vehicles under the SVP program; a one -time transfer of $1.0 million from the electric Utility Fund to support a new City Attorney position added to support SVP and Finance and Human Resources positions that support SVP operations (these positions will be factored into the cost allocation plan starting in FY 2023/24); and a transfer of $0.2 million from the Building Development Services Fund to cover a portion of the Code Enforcement costs that support development activity.

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AND USES OF FUNDS
General Fund Uses

Overall, the FY 2022/23 Amended General Fund Uses total $359.8 million. Of this amount, $259.3 million accounts for operational expenditures , $ 10.3 million are transfers to o ther funds , and $90. 2 million represent fund balance and reserves.

The following table summarizes the General Fund expenditures and transfers.

Expenditures
FY 2020/21
Actual
FY 2021/22
Amended
FY 2021/22
Estimate
FY 2022/23
Adopted
FY 2022/23
Change
FY 2022/23
Amended
Salaries 120,060,375 99,677,910 99,677,910 129,872,664 (2,153,330) 127,719,334 Retirement – Safety 29,295,456 33,056,981 33,056,981 35,526,227 988,000 36,514,227 Retirement – Misc. 17,242,223 18,296,744 18,296,744 19,459,091 156,920 19,616,011 Other Benefits 17,479,874 19,732,211 19,732,211 20,377,853 194,616 20,572,469 Materials/Services/
Supplies 21,662,982 28,980,461 28,576,834 29,205,307 769,451 29,974,758 Interfund Services 22,259,696 22,721,341 22,721,341 23,392,123 1,485,248 24,877,371 Capital Outlay 4,411,951 140,393 140,393 128,073 (65,173) 62,900 Total Expenditures 232,412,557 222,606,041 222,202,414 257,961,338 1,085,732 259,337,070 Transfers Out* 33,788,132 48,479,725 48,479,725 6,675,584 3,578,701 10,254,285 Total Expenditures
and Transfers Out 266,200,689 271,085,766 270,682,139 264,636,922 4,664,433 269,591,355

* In FY 2021/22, the Transfers Out category includes a one-time transfer of the Building Inspection Reserve to the newly established Building Development Services Fund.

As a public service organization focused on delivering high-quality services to our community, labor costs reflect the highest level of investment at 76% of the expenditure budget . Following is a discussion of the General Fund expenditure categories.

Salaries and Benefits

The expenditures in this category account for full -time and part -time salaries, retirement, health, social security, other employer benefits, and overtime costs. The FY 2022/23 Amended Budget factors in the latest negotiated salary adjustments and updated retirement and benefit costs. Salaries and benefits total $204.4 million in the FY 2022/23 Amended Budget . Note that $26.2 million in public safety costs were shifted to the American Rescue Plan Act Fund in FY 2021/22 to account for the one-time federal stimulus funds received to help offset the COVID-19 impacts on the City ‘s budget.

The City of Santa Clara participates in the California Public Employees’ Retirement System (CalPERS) under the Miscellaneous Retirement Plan and the Safety Retirement Plan. In FY 2022/23, retirement costs in the General Fund are budgeted at $36.5 million for Safety employees and $19.6 million for Miscellaneous employees.

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Materials, Services, and Supplies

The FY 2022/23 Amended Budget totals $30.0 million for materials, services, and supplies. This budget reflects Base Budget adjustments to account for the updated cost of providing existing services in FY 2022/23, the removal of one- time funding approved for FY 2021/22, and the FY 2022/23 budget actions approved in the FY 2021/22 and FY 2022/23 Biennial Operating Budget.

Interfund Services

Interfund services are citywide in nature and funded through internal service funds (Information Technology Department services, special liability fund, workers' compensation, Publi c Works capital project management, vehicle equipment and maintenance, fleet purchases, and communications equipment) that are apportioned to City Departments and funds. This category totals $24.9 million in the FY 2022/23 Amended Budget.

Capital Outlay

This category includes small capital expense purchases not budgeted within the capital budget. This category totals $0.1 million in FY 2022/23.

Transfers Out to Other Funds

This category includes transfers to other funds to support capital projects, the City’s share of assessment district costs, other services, and debt payments. The FY 2022/23 Amended Budget for this category totals $10.3 million, including $7.1 million for capital projects, $1.4 million for debt payments, and $1.8 million for assessment district payments and other services.

General Fund Reserves

The General Fund includes several reserves established by City Council policy or to segregate restricted revenues. Additional detail regarding reserve policies can be found in the Budget and Fiscal Policies section of this document.

Budget Stabilization Reserve

This reserve is used as an allocation for weathering economic downturns, emergency financial cris es or disaster situations. Per Council policy, the Budget Stabilization Reserve (BSR) target is equal to the cost of the City’s General Fund operations for three months, or 25% of the expenditure budget. Given the significant impacts of COVID -19 on the City’s budget, the City Council adopted the FY 2022/23 budget principles that allow this reserve to drop to 15% of budgeted expenditures, with any remaining FY 2022/23 shortfall to be addressed with the Land Sale Reserve. The FY 2022/23 BSR of $40.4 million is set at 15% of expenditures.

Capital Projects Reserve

The Capital Projects Reserve (CPR) earmarks funds for the Capital Improvement Program (CIP). The minimum target for this reserve is $5.0 million. This reserve is fully used in this CIP, with $5.4 million reserved for capital projects programmed from FY 2023/24 through FY 2026/27. 156

FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | STATEMENT OF SOURCES

AND USES OF FUNDS
Land Sale Reserve

The City Council established the Land Sale Reserve with net proceeds from the sale of City-owned land, with interest earned on these funds being available to be appropriated for General Fund operating expenditures. The Land Sale Reserve has a projected ending balance of $12.7 million for FY 2022/23 and is available for appropriation by City Council action. In the FY 2022/23 Amended Budget, the Land Sale Reserve drops by $9.7 million, from $22.4 million to $12.7 million, as a budget balancing strategy.

Advanced Planning Fee Reserve

The advanced planning fee is collected as a portion of planning and building fees. These funds are set aside for future long- range planning activities. The Advanced Planning Reserve has a projected ending balance of $1.4 million for FY 2022/23.

Technology Fee Reserve

The Technology Fee Reserve sets aside the technology fee revenue collected with the development fees and other applicable fees. This reserve is used to fund Accela licensing costs and other technology improvements for the fee programs that assess this fee. The Technology Fee Reserve has a projected ending balance of $1.4 million for FY 2022/23.

Other Reserves

By Council Policy, other reserves are set aside in the General Fund including the Pension Stabilization and Historical Preservation Reserves. At the end of FY 2022/23, the Pension Stabilization Reserve is projected to total $24.0 million and the Historical Preservation Reserve is projected to total $91,402.

Contributions to the Pension Stabilization Reserve are typically recommended as part of the Year -End Report to allocate interest earnings and other funding, if available. No additional contributions are assumed as part of this Biennial Budget.

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AND USES OF FUNDS
GENERAL FUND | GENERAL FUND (0 01)

2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Beginning Fund Balance
Encumbrance Carryover 4,273,693 4,817,658 4,817,658 4,273,693 4,817,658 Budget Stabilization Reserve 79,939,635 56,805,262 56,805,262 53,905,631 53,615,880 Capital Projects Reserve 29,014,222 5,335,223 5,335,223 4,248,758 6,719,000 Reserve for Programmed Capital Projects 0 11,038,674 11,038,674 3,151,081 3,151,081 Building Inspection Reserve 14,105,480 17,939,108 17,939,108 0 0 Advanced Planning Fee 642,410 741,694 741,694 741,694 1,395,605 Technology Fee Reserve 770,771 1,367,900 1,367,900 1,078,241 1,426,173 Land Sale Reserve 22,782,506 24,120,766 24,120,766 23,381,324 22,438,333 Pension Stabilization Reserve 21,597,338 23,978,108 23,978,108 21,597,338 23,978,108 Historical Preservation Reserve 90,096 91,402 91,402 90,096 91,402 Santana West Reserve 5,000,000 0 0 0 0
Unrestricted 2,594,262 9,069,610 9,069,610 0 132,559
Total Beginning Fund Balance 180,810,413 155,305,405 155,305,405 112,467,856 117,765,799 Revenue
Property Taxes - Secured 65,874,290 68,709,000 69,049,000 72,109,000 72,381,000 Property Taxes - Unsecured 2,898,631 2,850,000 2,597,000 2,880,000 2,880,000 Sales Tax 55,593,141 57,483,000 57,500,000 60,238,000 59,400,000 Public Safety Sales Tax 584,956 700,000 750,000 721,000 773,000 Documentary Transfer Tax 1,501,174 1,450,000 1,450,000 1,479,000 1,480,000 Transient Occupancy Tax 2,949,235 9,000,000 9,000,000 12,600,000 12,600,000 Franchise Taxes 4,322,635 4,630,000 4,630,000 4,780,000 4,780,000 Rents 9,154,034 10,015,522 10,015,522 11,840,983 11,336,766 State Revenues 258,376 224,000 224,000 224,000 250,000
Other Agencies Revenues 2,464,043 390,000 390,000 60,000 60,000 Licenses and Permits 12,137,804 3,685,000 3,685,000 3,773,000 3,597,000 Fines and Penalties 421,088 1,496,135 500,000 1,534,089 1,465,000 Other Fees for Services 35,239,038 36,949,512 36,949,512 38,559,499 38,622,245 Interest 5,616,800 2,600,000 2,600,000 2,266,000 2,532,000 Silicon Valley Power Transfer 24,548,225 24,700,000 25,285,000 25,565,000 26,170,000 Other Revenue 6,732,356 198,000 250,000 150,000 150,000 Total Revenue 230,295,826 225,080,169 224,875,034 238,779,571 238,477,011 Transfers From
Building Development Services Fund 0 163,362 163,362 168,845 179,036 Building Special Programs and Training
Fund
1,796 1,765 1,765 1,765 1,765

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AND USES OF FUNDS
GENERAL FUND | GENERAL FUND (0 01)

2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Transfers From
Convention Center Capital Fund 0 40,000 40,000 0 0
Convention Center Enterprise Fund 20,000 0 0 0 0
Convention Center Maintenance District
Fund
0 383,097 383,097 0 0
Electric Utility Fund 53,200 1,059,733 1,059,733 712,503 986,573 Electric Utility Capital Fund 580,000 0 0 0 0
Fire Department Capital Fund 192,674 236 236 0 0
General Government Capital Fund 884,901 460 460 0 0
Library Department Capital Fund 21,120 0 0 0 0
Other City Departments Operating Grant
Trust Fund
1,000,000 10,000 10,000 0 0
Parking Maintenance District Fund 6,000 0 0 0 0
Parks and Recreation Capital Fund 3,327,203 540,803 1,989,950 0 0 Prefunded Plan Review Fund 0 13,101 13,101 0 0
Public Buildings Capital Fund 1,010,089 52,673 1,002,673 0 0 Public Works Capital Projects
Management Fund
0 307,505 307,505 0 0
Special Assessment District Capital Fund 1,638,015 0 0 0 0 Storm Drain Capital Fund 1,460,000 1,550,134 2,115,134 1,454,000 1,454,000 Streets and Highways Capital Fund 204,857 44,726 44,726 0 0 Tasman East Infrastructure Improvement
Fund
0 175,757 175,757 0 0
Vehicle Replacement Fund 0 960,000 960,000 960,000 960,000 Total Transfers From 10,399,855 5,303,352 8,267,499 3,297,113 3,581,374 Total Source of Funds 421,506,094 385,688,926 388,447,938 354,544,540 359,824,184 Expenditures
Salaries 120,060,375 99,677,910 99,677,910 129,872,664 127,719,334 Retirement - Safety 29,295,456 33,056,981 33,056,981 35,526,227 36,514,227 Retirement - Miscellaneous 17,242,223 18,296,744 18,296,744 19,459,091 19,616,011 Other Benefits 17,479,874 19,732,211 19,732,211 20,377,853 20,572,469 Materials/Services/Supplies 21,662,982 28,980,461 28,576,834 29,205,307 29,974,758 Interfund Services 22,259,696 22,721,341 22,721,341 23,392,123 24,877,371 Capital Outlay 4,411,951 140,393 140,393 128,073 62,900 Total Expenditures 232,412,557 222,606,041 222,202,414 257,961,338 259,337,070

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FY 2022/23 AND FY 2023/24 PROPOSED CAPITAL IMPROVEMENT PROGRAM BUDGET | STATEMENT OF SOURCES

AND USES OF FUNDS
GENERAL FUND | GENERAL FUND (0 01)

2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Transfers To
Building Development Fee Fund 0 22,347,656 22,347,656 0 0 Building Special Programs and Training Fund 7,000 0 0 0 0 Cemetery Fund 771,769 850,000 850,000 870,000 870,000
Cemetery Capital Fund 300,000 8,409 8,409 8,730 9,225
City Affordable Housing Fund 3,100,000 0 0 0
Convention Center Maintenance District Fund 771,349 771,349 771,349 842,700 842,700 Downtown Parking Maintenance District Fund 155,571 0 0 0 0 Electric Utility Capital Fund 0 330,000 330,000 0 0
Engineering Operating Grant Trust Fund 3,333 55,753 55,753 0 0 Fire Department Capital Fund 290,796 837,110 837,110 247,536 588,153 Fire Operating Grant Trust Fund 7,228 0 0 0 0
General Government Capital Fund 3,185,402 720,283 720,283 39,283 89,283 Library Department Capital Fund 13,076 7,872 7,872 8,173 281,831 Library Operating Grant Trust Fund 0 156 156 0 0
Other City Departments Operating Grant Trust
Fund
3,280,000 544,275 544,275 0 0
Parks and Recreation Capital Fund 1,221,880 2,343,117 2,343,117 200,000 200,000 Parks and Recreation Operating Grant Trust
Fund
28,509 3,445 3,445 3,445 3,445
Police Operating Grant Trust Fund 0 22,768 22,768 0 0
Public Buildings Capital Fund 1,737,751 397,953 397,953 13,448 1,189,532 Public Facilities Financing Corporation Fund 2,500,344 2,501,439 2,501,439 1,402,275 1,402,275 Solid Waste Fund 1,000,000 33,600 33,600 33,600 35,364
Special Liability Insurance Fund 0 5,200,000 5,200,000 0 0 Storm Drain Capital Fund 4,489,447 600,411 600,411 262,849 963,432 Streets and Highways Capital Fund 10,459,697 10,904,129 10,904,129 2,743,545 3,779,045 Tasman East Infrastructure Improvement Fund 175,757 0 0 0 0 Unemployment Insurance Fund 289,223 0 0 0 0
Total Transfers To 33,788,132 48,479,725 48,479,725 6,675,584 10,254,285

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AND USES OF FUNDS
GENERAL FUND | GENERAL FUND (0 01)

2020/21
Actual
2021/22
Amended
2021/22
Estimate
2022/23
Adopted
2022/23
Amended
Ending Fund Balance
Encumbrance Carryover 4,817,658 4,817,658 4,817,658 4,273,693 4,817,658 Budget Stabilization Reserve 56,805,262 53,615,880 53,615,880 36,600,000 40,439,000 Capital Projects Reserve 5,335,223 5,002,508 6,719,000 4,248,758 0 Reserve for Programmed Capital Projects 11,038,674 3,151,081 3,151,081 2,304,262 5,364,314 Building Inspection Reserve 17,939,108 0 0 0 0
Advanced Planning Fee 741,694 1,395,605 1,395,605 741,694 1,395,605 Technology Fee Reserve 1,367,900 1,426,173 1,426,173 1,258,941 1,426,173 Land Sale Reserve 24,120,766 21,124,745 22,438,333 18,792,836 12,720,569 Pension Stabilization Reserve 23,978,108 23,978,108 23,978,108 21,597,338 23,978,108 Historical Preservation Reserve 91,402 91,402 91,402 90,096 91,402 Santana West Reserve 0 0 0 0 0
Unrestricted 9,069,610 0 132,559 0 0
Total Ending Fund Balance 155,305,405 114,603,160 117,765,799 89,907,618 90,232,829 Total Use of Funds 421,506,094 385,688,926 388,447,938 354,544,540 359,824,184

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Special Revenue
Funds and Other Funds
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SPECIAL REVENUE FUNDS AND OTHER FUNDS
Special Revenue Funds are established to account for specific revenue sources that are legally restricted or committed to particular purposes. The City of Santa Clara has various revenue sources that require separate Special Revenue Funds to be set up. The Other Funds relate to special assessments funds.

American Rescue Plan Act (ARPA) Fund (102)

The American Rescue Plan Act (ARPA) Fund was established in FY 2021/22 to account for Fire Department and Police Department expenditures that are eligible to be funded via federal ARPA funds.

Bridge Maintenance District #2 Fund (463)

The Bridge District #2 Fund sets aside revenue received through the apportionment of secured property tax as well as the RDA revenue distribution. This funding is then transferred to the Streets and Highways Capital Fund to cover costs associated with the Bridge Maintenance Program project.

Building Development Services Fund (155)

The Building Development Services Fund was established in FY 2021/22 to account for building development -related fee revenue and associated building development services costs. The Building-related revenues and expenditures were previously reflected in the General Fund.

Building Special Programs and Training Fund (220)

This fund was formerly the Certified Access Specialist (CASp) Certification and Training Fund but was retitled to incorporate additional changes to the fund starting in FY 2021/22. The fund now incorporates Building Seismic/Strong Motion Fees and Building Standard Fees, in addition to CASp fees. All three revenue streams are related to state- mandated building permit fee surcharges (Building Standard and Seismic) or from the City’s business license tax (CASp) and are for specific uses such as updating building code manuals or training related to updates in accessibility designs.

City Affordable Housing Fund (165)

The City Affordable Housing Fund accounts for the City’s Below-Market Price Purchase Program, which helps low- and moderate-income families achieve the goal of homeownership. This fund promotes and facilitates the construction and retention of affordable housing, fulfilling State mandates to produce housing for all income levels. Revenues in the City Affordable Housing Fund are received from developer in-lieu fees, principal, and interest repayments on housing loans, as well as interest income on pooled investments.

Community Facilities District No. 2019-1 (Lawrence Station) Fund (027)

A resolution was adopted by Council in March 2019 to form a new Community Facilities District Fund to finance maintenance of roadways, parks, parking spaces and enforcement, landscaped parkways and medians, trails, a highway overpass and a community clubhouse and garden to be located within the development at Lawrence Station.

The special taxes will be used to fund the authorized public services. Pursuant to Report to Council 19- 249, the Fund will also maintain additional funding necessary to replace facilities near end- of-service life (straight line depreciation of 15 years) in a capital reserve of 20%. The property assessments increase annually by Consumer Price Index (CPI).

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Convention Center Maintenance District Fund (026)

This fund provides maintenance and landscaping to the common grounds within the Santa Clara Convention Center Complex. Funds are received by means of a Special Benefits Assessment levied against the property owners in the respective districts. This fund's expenditure budget is determined using fee estimates for cost recovery.

Developer Traffic Payments Fund (124)
Previously named the “Traffic Fair Share Fund,” this fund was established in FY 2020/21 and is managed by the Department of Public Works. The Developer Traffic Payments Fund is funded by developer contributions collected for specific jurisdictions and locations. Funding is allotted to non- City agencies for eligible projects or transfers to a capital project.

Downtown Parking Maintenance District Fund (025)

The purpose of the Downtown Parking Maintenance District is to maintain the grounds of the Franklin Square complex.

The Franklin Square complex is bounded by Monroe Street to the west, Jackson Street to the east, Benton Street to the north, and Homestead Road to the south. Maintenance of the landscape infrastructure is paid for by the General Fund. Extraordinary repairs to the asphalt parking lot and concrete walkways are funded by property owner assessments that are capped at $14,200 per year.

Endowment Care Fund (077)

This fund holds the non-expendable account of the fees collected from cemetery patrons. Interest earned from the cash maintained is contributed for the current maintenance of the cemetery.

Engineering Operating Grant Trust Fund (144)

This fund accounts for revenues received from other governmental agencies that are designated for specific uses in the Community Development Department. Grants are appropriated as they are received by the Department and approved by the City Council.

Expendable Trust Fund (079)

The Expendable Trust Fund accounts for assets held in a trustee capacity where the principal and income may be expended in the course of the fund’s restricted/designated operations. Funds are appropriated as they are received by departments and approved by the City Council.

Fire Operating Grant Trust Fund (178)

This fund tracks revenues from other governmental agencies received by the Fire Department for fire safety and medical services activities. The grants are provided by federal, state and County agencies. Grants are appropriated as they are received by the Fire Department and approved by the City Council.

Gas Tax Fund (121)

The Gas Tax Fund accounts for revenues and expenditures received from the State of California under Street and Highway Code Sections 2105, 2106, and 2107. Gas tax is imposed by the State as a per-gallon excise tax on gasoline and diesel fuel. Cities and counties receive an allocation from the State based on population and the proportion of registered vehicles. This funding is restricted for street maintenance, construction, and a limited amount for engineering. 166

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Housing and Urban Development Fund (562)
The City of Santa Clara receives annual funds from the U.S. Department of Housing and Urban Development (HUD) to administer the Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) programs.

The CDBG program funds various nonprofit agencies and other city departments to implement services that benefit low- and moderate-income persons. The HOME program funds a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low -income people.

Grantees are generally selected through a competitive process and provide such services as senior services, homeless outreach, housing rehabilitation, accessibility improvement and code enforcement. The City currently dedicates HOME funds for the Tenant-Based Rental Assistance (TBRA) program.

Housing Authority Fund (164)
The Santa Clara Housing Authority (SCHA) was established by the City Council to assume responsibility for managing and monitoring housing assets from the dissolution of the Redevelopment Agency (RDA). SCHA also assumes the responsibility for housing loans, which provide affordable housing and were made under various programs, for qualifying individuals and groups. The SCHA receives its main source of revenues from program income, which is used to support loan monitoring, administration, and other programs and projects of the Housing and Community Services Division of the Community Development Department.

Housing Successor Agency Fund (169)
All California Redevelopment Agencies (RDA) were dissolved on February 1, 2012. Following the dissolution, the City of Santa Clara was designated as the Housing Successor to the former RDA, responsible for paying off the former RDA’s existing debts, disposing of the former RDA’s properties and assets to help pay off debts, returning revenues to the local government entities that receive property taxes and winding down the affairs of the former Redevelopment Agency. The City has also elected to retain the former RDA’s housing functions, including retaining all of the housing assets, rights, power, duties, obligations and functions previously performed by the RDA in administering its Low and Moderate Income Housing Fund.

Library Donations Trust Fund (072)

This fund accounts for donations that are received and accepted by the City of Santa Clara’s Library Department. These donations are for designated uses. Donations are appropriated as they are received by the Library Department and approved by the City Council.

Library Operating Grant Trust Fund (112)

This fund accounts for revenues received from other governmental agencies that are designated for specific uses in the Library Department. Grants are appropriated as they are received by the Library Department and approved by the City Council.

Other City Departments Operating Grant Trust Fund (101)

The Other City Departments Operating Grant Trust Fund accounts for any financial award given by the federal, State, or other local government to the City for Citywide eligible operating programs. Grants that are designated for department - specific functions are deposited into the respective departments’ operating grant trust fund. Grants are appropriated as they are received by departments and approved by the Ci ty Council. Starting in FY 2019/20, the City charged expenditures related to COVID-19 to this fund in order to separately track these costs. FEMA reimbursements are also budgeted in this fund.

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Parks and Recreation Operating Grant Trust Fund (111)

The Senior Nutrition Program provides a congregate meal setting where seniors can improve their health through balanced meals and socialization and is funded through a grant from the Santa Clara County Social Services Agency’s Senior Nutrition Program and Community Development Block Grant funds. Seniors are encouraged to access the many services available at the Senior Center while on site and are given the opportunity to engage in Health & Wellness programs at the Senior Center. Grants are appropriated as they are received by the Parks and Recreation Department and approved by the City Council.

Perpetual Care Fund (076)
This fund accounts for current fees collected from cemetery patrons for maintenance in perpetuity of the Mission City Memorial Park when the facility reaches full capacity. Interest earned from the cash maintained is contributed for the current maintenance of the cemetery.

City Council and Authorities ConcurrentJune 21, 2022

City Council and Authorities Concurrent
June 21, 2022