City Council and Authorities Concurrent
May 19, 2026

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City Council MeetingItem #1: Review of the Proposed FY 2026/27 & FY 2027/28 Biennial Capital Improvement Program Budget and FY 2026/27 Operating Budget ChangesMay 19, 2026 •Proposed Budget Overview•Capital Budget for FY 2026/27 and FY 2027/28 and Five-Year CIP–Measure I Bond Funding–General Fund Capital Projects Reserve –Summary by Capital Theme•Operating Budget Amendments to FY 2026/27•Responses to Questions from May 5thStudy Session•Questions and AnswersAgenda2 1 2
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Proposed Budget Overview3
4Budget Calendar •Oct – Nov 2025 – Departments submit CIP Project requests; turn over Operating Budget and begin work on proposed Municipal Fee Schedule•November – March – Review of CIP and Operating Budget requests; prepare Ten-Year General Fund Forecast, complete review of Proposed Municipal Fee Schedule•April 14 – City Council Study Session on the Proposed Municipal Fee Schedule•April 21 – Public Hearing and Adoption of the Proposed Municipal Fee Schedule•April 28 – Proposed Capital Budget Released•May 5 – City Council Study Session on Capital Budget and Operating Budget Changes•May 19 – Second Study Session on Capital Budget and Operating Budget Changes •June 9– City Council Adoption of Capital Budget, Gann Limit, Operating Budget Changes and CIP Carryovers 3 4
3 5Overview (Biennial Budget Cycle)June 2026Dec 2026June 2027Dec 2027June 2028Capital Budget•Adopt Biennial Budget•Amend Budget (2ndYear)Operating BudgetBudget Monitoring/Year-End Report• Adopt Biennial Budget• Amend Budget (2ndYear)• Adopt Biennial Budget• Amend Budget (2ndYear)•Close and reconcile FY 2025/26•Close and reconcile FY 2026/27 Proposed Budget Overview6Measure IGO Bond ImplementationCapital Project DeliveryCity Services and Organizational EffectivenessFiscal Sustainability and Planning for the Future•Measure I: $400 M GO Bonds; Tranche 1 projects total $96.6M of which $63.2M is reflected in CIP•Dedicated staff focused on project delivery•Tranche 2 and 3 to be reflected in future CIPs•Council Priorities•Position changes to address organizational reviews/other needs•More effective service delivery•Additional adjustments expected in next Operating Budget•Significant funding for utility infrastructure•Dedicated funds for transportation projects•Capital Projects Reserve to support high priority projects •Improved General Fund Forecast addresses structural deficit•New Infrastructure Replacement Capital Fund •Reserve to restore previously frozen positions 5 6
4 Total City Budget7* Does not include the Stadium Authority Budget** Adjusts for transfers, contributions and reserves to avoid double counting of the same funds*** FY 2026/27 Proposed Budget does not yet include carry forward of capital projects from FY 2025/26 City of Santa Clara Budget*FY 2026/27Proposed BudgetFY 2025/26Adopted BudgetFund Type$365,418,808$335,374,572 General Fund 43,199,21352,037,355Special Revenue Funds 1,228,839,4451,012,631,859Enterprise Funds49,000,12451,672,525Internal Service Funds64,479,696273,236,049Debt/Other*(436,802,534)(529,425,156)Less (Transfers, Contributions, and Reserves)**$1,314,134,752$1,195,527,204 Subtotal Operating Budget362,495,965777,527,724Capital Funds***(2,154,000)(1,454,000)Less (Transfers, Contributions, and Reserves)**$360,341,965$776,073,724 Subtotal Capital Budget$1,674,476,717$1,971,600,928Total Budget• Funds appropriated annually• Year 1 of the Biennial Capital Budget• Revisions to Year 2 of the FY 2025/26 and FY 2026/27 Operating Budget adopted in June 2025 88 Capital Budget for FY 2026/27 and 2027/28 and Five-Year CIP8 7 8
5 Measure I General Obligation Bond9• Tranche 1 capital projects totaled $96.6 M; Proposed CIP includes Tranche 1 projects carried over from FY 2025/26 totaling $63.2 M• Planning to issue bonds in three phasesFire Stations and Emergency Response ($142,235,450)Parks, Libraries, Senior Center, and Aquatics Facilities ($115,258,750)Storm drain System Improvements ($46,000,000)Police Facilities ($43,987,500)Streets and Transportation ($41,170,000)Historic Buildings and Beautification ($9,200,000) Measure I General Obligation Bond10Transparency and Accountability• Bond proceeds can only be spent on projects and programs that serve Santa Clara and must align to the adopted Expenditure Plan• With the exception of the project management and delivery costs, Bond proceeds cannot be used for employee salaries. Administrative costs capped at 5% • Annual independent performance audits and financial audits submitted to the California State Auditor for review and posted on the City’s website.• Bond Compliance Oversight Committee to ensure that Bond proceeds are expended only for the purposes described in the measure • Separate fund to account for the Bond proceeds and expenditures• Finance Director to report to the City Council at least annually on the actual bond proceeds and expenditures and the status of improvements• No improvements to Levi’s Stadium or improvements that benefit any professional sports teamAmending the Expenditure Plan1. City staff review, analyze and make a recommendation on any proposed substantive amendment to the Expenditure Plan (“Amendment”). 2. Prior to City Council consideration, any such proposed Amendment will first be submitted to the Bond Compliance Oversight Committee for their review and recommendation. 3. Any proposed Amendment requires the unanimous approval of the City Council. 9 10
6 General Fund Capital Projects Reserve (CPR)11Administrative Facilities, $ 4.8 M, 30.3%Other Community Projects, $ 0.1 M, 0.1%Community Facilities, $ 2.1 M, 13.2%Parks and Trails, $ 1.0 M, 6.4%Storm Drain, $ 4.6 M, 29.0%Technology & Equipment, $ 0.3 M, 2.0%Transportation, $ 3.0 M, 19.0%CPR Funding in Five-Year CIP = $15.9 M•General Fund CPR funded from excess revenues and expenditure savings at the end of a fiscal year•Used to fund capital projects with no other funding source•Use of $15.9 M, including new projects identified in this CIP ($12.9 M) and projects with funding set aside in prior CIP ($3.0 M); remaining balance of $12.5 M •Address high priority needs across program areas CIP Projects by Theme12Five-YearCIPBiennial Budget2027/28Budget2026/27BudgetTheme$17,640,450$16,190,450$3,482,500$12,707,950Administrative Facilities$8,835,750$6,693,750$0$6,693,750Community Facilities$0$0$0$0Convention Center*$739,393,000$396,841,000$171,415,000$225,426,000Electric Utility$18,968,087$7,604,133$3,779,339$3,824,794Other Community Projects$19,874,595$8,038,145$742,145$7,296,000Parks and Trails$156,945,767$59,883,809$29,553,430$30,330,379Sewer Utility$7,026,516$4,294,160$3,060,000$1,234,160Solid Waste$20,382,300$19,932,300$416,000$19,516,300Storm Drain$2,020,000$943,000$386,000$557,000Technology and Equipment$97,286,186$61,487,173$14,306,541$47,180,632Transportation$24,425,000$11,150,000$5,575,000$5,575,000Water and Recycled Water Utilities$1,112,797,651$593,057,920$232,715,955$360,341,965TOTAL* Convention Center funding to be brought forward separately. 11 12
7 Proposed CIP –Electric Utility Theme13Five-Year CIP: $739.4 million• CAISO 3rd 230kV Transmission Line Into NRS ($109.4 M)• Transmission Loop 1 ($106.9 M)• Spare Equipment Strategy & Procurement ($44.0 M)• New Business Estimate Work ($43.3 M)• Homestead Substation Rebuild ($40.0 M)• Agnew Rebuild and Expansion ($38.4 M)• Transmission & Distribution Capital Maintenance & Betterments ($35.7 M)Major Funding Sources: Transfer from Electric Utility Fund (customer service charges), debt financing, developer contributions, load development feesAccomplishments• Continued progress on NRS, KRS, and SRS Rebuild and Replacements• Completed Storm Water Compliance project• Completed Memorex Junction Substation• Completed the replacement of the Balance of the Plant Control System for DVR Proposed CIP –Administrative Facilities Theme14Five-Year CIP: $17.6 million• Measure I Projects (fire station 5 and 7 replacements, fire training tower, fire station security upgrades, feasibility funds for real time intelligence center, Police training facility and Police drone first responder infrastructure, Triton Museum roof replacement) • Public Parking Improvements• Repairs – Modifications to City Buildings and Historic Buildings• ADA transition Plan Implementation (Public Buildings)• Electric Vehicle Charging (Fleet)• Fleet Shop RetrofitMajor Funding Sources: Measure I Bond Funds, General Fund CPRAccomplishments• Construction for Phase II Stationary Standby Generators; design for Phase III• Complete Upgrade Lighting to LED project at 32 City buildings (energy savings and reduction in greenhouse gas emissions) 13 14
8 Proposed CIP –Community Facilities Theme15Five-Year CIP: $8.8 million• Measure I Projects (Central Library Restrooms & Access Control Redesign, Central Library Lighting Control System Replacement, Central Library Entry Auto Door System Replacement, Central, Mission, and Northside Libraries Renovation Design, Community ISC Aquatic Facility Renovation/Replacement)• Central Park Library – Carpet Replacement• Central Park Library – Repaint InteriorMajor Funding Sources: Measure I Bond Funds, General Fund CPR, Mitigation Fee Act & Quimby Act fees, developer contributionsAccomplishments• The ISC project is in the pre-construction phase with a Notice to Proceed issued on March 16, 2026• The concrete sidewalk replacement at Central Park Library was completed Proposed CIP –Convention Center Theme16Five-Year CIP: Unfunded• The proposed budget does not include funding in the five-year CIP for the Convention Center• Existing appropriations will be used to complete the kitchen refresh, including updating the corridor and preparation areas. Other projects underway include replacement of the HVAC and cooling tower and installation of drop ceilings.• Potentially allocate excess revenue to the Convention Center project as part of the FY 2025/26 budget year-end reportMajor Funding Sources: Convention Center Enterprise Fund, OVG360 and Levy ContributionsAccomplishments• Front buildings were updated with a new fresh paint palette and stucco improvement 15 16
9 Proposed CIP –Parks and Trails Theme17Five-Year CIP: $19.9 million• Measure I Projects (Warburton Park Playground Renovations, Henry Schmidt Park Playground Renovations – funding in FY 2025/26)• Maywood Park Playground Rehabilitation• Earl Carmichael Park Playground Rehabilitation• Community Park North – Phase 1 (developer funded)• Mary Gomez Park Playground Rehabilitation• Park Improvements and RepairsMajor Funding Sources: Measure I Bond Funds, Mitigation Fee Act & Quimby Act fees, developer contributions, General Fund CPRAccomplishments• Developer Funded parks completed in FY 2025/26: Calle Del Mundo Park, Calle De Lune Park, and Gateway Grossing Park Proposed CIP –Sewer Utility Theme18Five-Year CIP: $156.9 million• Updated annual allocation of capital infrastructure for the Regional Wastewater Facility, co-owned with the City of San José• Sanitary Sewer Condition Assessments• Sanitary Sewer Capacity and System Improvements Major Funding Sources: Transfer from Sewer Utility Fund (customer service charges), debt financingAccomplishments• Completed approximately 170,000 linear feet of CCTV inspection of sewer infrastructure and 500,000 linear feet of flushing/jetting• Completed the Sanitary Sewer Master Plan in 2025 17 18
10 Proposed CIP –Solid Waste Theme19Five-Year CIP: $7.0 million• Sanitary Landfill Development – Post Closure• Emergency Backup and Collection System Enhancements for Closed Landfill (new) to increase the reliability of the City’s existing landfill gas flare and collection systemMajor Funding Sources: Transfer from Solid Waste Operating Fund (customer service charges), developer contributionsAccomplishments• Multiple sections of landfill gas pipeline were repaired to maintain vacuum on the collection system and prevent methane emissions• Landfill surface was regraded to facilitate proper drainage and prevent ponding at several locations• All mandated reports were submitted to regulatory agencies on time Proposed CIP –Storm Drain Theme20Five-Year CIP: $20.4 million• Measure I Projects (Storm Drain System Improvements, Green Storm Drain Infrastructure Design and Construction, Bowers Ave Underpass SDPS Rehabilitation, Storm Drain Renovations)• Storm Drain Pump Station Remote Terminal Unit (RTU) Upgrade• Storm Drain Master Plan Update• Lickmill Storm Drain Pump Station Rehabilitation• Tri-Level Underpass Storm Drain Pump Station Rehabilitation• Fairway Glen Storm Drain Pump Station RehabilitationMajor Funding Sources: Measure I Bond Funds, General Fund CPR, grantsAccomplishments• Completed construction of the Storm Drain Slide Gate Rehabilitation Project• Successfully maintained all 21 storm drain pump and lift stations to manage stormwater runoff 19 20
11 Proposed CIP –Technology and Equipment Theme21Five-Year CIP: $2.0 million• Fire Station 3 Sprinklers• Permit Information System (funding by Technology Reserve)• GIS Enterprise System • Replacement of VOIP Phone System for Aging Mitel Connect Major Funding Sources: General Fund CPR, Utility FundsAccomplishments• Launched a customer service-based platform, Qmatic (development svcs)• Fire Dept. implemented new Accela modules• AR and Billing implemented for Stadium Authority• Expanded Enterprise Asset Management• GIS Improvements• Updated asset datasets for over 1,300 City trees and over 300 traffic signs Proposed CIP –Transportation Theme22Five-Year CIP: $97.3 million• Measure I Projects (Street Resurfacing and Rehabilitation, ADA Improvements, Creek Trail Rehabilitation, Bicycle Wayfinding)• Annual Street Maintenance and Rehabilitation Program (current Pavement Condition Index is approx. 73 and is projected to increase to 74 during 5-year CIP w/transportation and GO bond funds) • Agnew Road At-Grade Crossing• Uncontrolled Crosswalks Improvement Project• Neighborhood Traffic Calming, Vision Zero• ADA Transition Plan Implementation• El Camino Real Bike Lane ProjectMajor Funding Sources: Measure I Bond Funds, gas tax, vehicle registration fees, SB1 funds, County Measure B, traffic mitigation fees, grants, General Fund CPRAccomplishments• Completed maint. and rehab for approx. 34 lane miles of street pavement in 2024 and 2025• Installed Rainbow Crosswalk• Constructed Class IV bicycle facilities on Mission College Boulevard from Great America Parkway to Montague Expwy.• Implemented 15 mph school zone speed limit program• Completed quick-build pedestrian safety improvements at the Winchester Blvd. and Dolores Ave. crosswalk• Implemented Central Transit Signal Priority at 23 signalized intersections 21 22
12 Proposed CIP –Water & Recycled Water Utilities Theme23Five-Year CIP: $24.4 million• Distribution System Replacement/Restoration• Buildings and Grounds • Pressure Regulating Zone Valve Replacement• Recycled Water System Mains and ServicesMajor Funding Sources: Transfer from Water Utility and Recycled Water Utility Operating Funds (customer service charges)Accomplishments• Completed a Sustainable Water Master Plan• Ongoing replacement of water infrastructure Unfunded Capital Needs24•Identified unfunded projects represent only a portion of the needs. Other needs total $1B+–Parks and Recreation Master Plan Phase 1 (Years 1-5 in 2025 dollars) - $185 M to $260 M–Library Facilities Master Plan – over $55 M for existing and new facilities (2025 dollars)–Vision Zero Action Plan - $350 M (2025 dollars) reduces high-injury traffic accidents–Storm Drain Master Plan - $290 M (2018 dollars)–Santa Clara Bicycle Plan Update 2018 - $39.3 M (in 2018 dollars)–Santa Clara Pedestrian Master Plan - $194.0 M (in 2019 dollars)–ADA Self-Evaluation and Transition Plan (Draft) -$758.5 M (in 2024 dollars)–Public buildings (e.g., City Hall, historic buildings)Administrative Facilities,$28.3 M, 11.2%Community Facilities, $50.0 M, 19.8%Convention Center, $10.4 M, 4.1%Other Community Projects, $0.1 M, 0.1%Parks and Trails, $88 M, 34.8%Storm Drain, $21.6 M, 8.5%Technology and Equipment, $0.2 M, 0.1%Transportation, $54.3 M, 21.4%Five Year CIP Unfunded Need = $252.9 M23 24 13
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FY 2026/27 Operating Budget Amendments25
FY 2026/27 Operating Budget Amendments26•FY 2025/26 and FY 2026/27 Adopted Operating Budget approved June 2025•FY 2026/27 Operating Budget amendments necessary to:– Update revenue estimates for the General Fund and other funds– Make adjustments to account for updated labor and non-personnel costs in the General Fund and other funds– Update resources and production costs in Enterprise Funds– Incorporate service enhancements in the General Fund (e.g., Council priorities, restore frozen positions, infrastructure replacement)– Update/Add positions (24.25 proposed positions)•Described in the Appendices section of the Proposed Budget 25 26
14 2727Proposed Position Changes•Position Changes/Organization Reviews −Parks and Recreation Organizational Review (6.0 FTE): oNet addition of 6.0 positions (1.0 Management Analyst, 3.0 FTE Office Assistant PT (partially offset by reduction in As-Needed), and 2.0 Recreation Coordinators)oNet-Zero Reclassifications to better align staff to meet service needs (Deputy Director to Assistant Director, Recreation Manager to Division Manager, Park Maint. Crafts Worker to Parks Construction, Maintenance and Repair Manager, Recreation Supervisor to Recreation Coordinator, Office Specialist III to Staff Aide I, Health and Wellness Coordinator to Recreation Coordinator)oRemove 3.0 Grounds Maintenance Worker I/II positions and Office Specialist from frozen position list•s 2828Proposed Position Changes•Position Changes/Organization Reviews −Public Works Organizational Review (7.0 FTE): oNet addition of 7.0 positions (1.0 Senior Engineer (Vision Zero); 2.0 Auto Technicians (limited dated for two years); 1.0 Senior Civil Engineer and 1.0 Associate Engineer (Measure I Bond Implementation); unfreeze 1.0 Assistant Engineer; and 1.0 Division Manager)oManagement Reclassification to better align staff to meet service needs (Deputy Director to Assistant Director)27 28 15
2929Proposed Position Changes•Position Changes/Organization Reviews −Electric Utility/Finance (Net 1.0 FTE): SVP Business Services restructure to move unit to the Finance Department (22 FTE in new division: 10 in SVP Purchasing and 12 in SVP Business Services)oShift 16.0 positions from SVP to Finance; Shift 5.0 existing Finance purchasing positions to Finance – SVP PurchasingoAdd 1.0 Management Analyst to Finance – SVP Business ServicesoElectric Utility (4.0 FTE)oAdd 1.0 Management Analyst (Engineering Support); 1.0 Key Customer Service Representative (Support large, complex customers); and 1.0 Staff Aide II and 1.0 Program Manager (Public Benefits Program)o$830K set aside for additional positions from ongoing organizational review (3.0 additional positions for June 9 budget adoption - HR Technician, Cybersecurity, Critical IT Infrastructure) 3030Proposed Position Changes•Outstanding Reviews in Progress and Future Organizational Reviews−CDD, Water and Sewer, SVP−Expected to result in additional organizational restructuring and position changes •Other Position Changes−City Manager’s Office (2.0 FTE) : Add 1.0 Sr. Management Analyst to support economic development - small business support (50% funding from Building Development Services) and unfreeze 1.0 Sr. Management Analyst to provide administrative/analytical support−Human Resources (4.0 FTE): Add 2.0 Management Analyst positions to support employee health and safety, 1.0 Management Analyst to support SVP and 1.0 Human Resources Technician to speed up hiring−Library (0.25 FTE): Increase 0.75 Office Specialist II to 1.0 Office Specialist II to support library administration 29 30
16 3131Hiring/Recruiting UpdateHiring Efforts Continue•As of April 25, 2026, 159.50 vacancies (vacancy rate of 13.2%), down from July 2025 rate of 15.9% •Active recruitments for 108.50 positions (60 classifications) and 14 As Neededclassifications (multiple hires) in progress•Classification/compensation projects for 4 classifications•July – late April Hiring: 115 new hires/rehires and 63 promotions versus 79 separations FY 2026/27 Proposed Balance FY 2025/26 Current BalanceReserve Type$84.0 M$81.5 MGeneral Fund Budget Stabilization (BSR)$12.5 M$21.4 MGeneral Fund Capital Projects$18.6 M$18.6 MLand Sale Reserve $49.2 M$42.1 MPension Stabilization Reserve (General Fund)$10.4 M N/ACapital Infrastructure Replacement (GF Transfer to new fund)32General Fund Reserves31 32 17
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Responses to Questions from May 5thStudy Session33
May 5thStudy Session Responses34Response: The Parks and Recreation Department has been working with the IT Department and third-party GIS Administrator to build the City’s Park “asset management” system (Lucity), a comprehensive enterprise asset management and work order system. The proposed budget includes key park management positions to help manage Lucity and the parks asset management program. The IT Department is working with the third-party administrator and will be conducting a software upgrade in the next few months – after which time, the software will be rolled out to the entire Parks Maintenance Division. The goal will be to fully update and integrate Lucity maintenance asset management program by the end of FY 2026/27. Once the software is fully integrated and assets are logged and tracked, staff will have a better understanding of the funding gaps relative to the on-going maintenance management of the entire Santa Clara park system, bringing forward any funding requests as part of the FY 2027/28 and FY 2028/29 operating budget.1. Question: Reading through parks master plan, technology is missing from the report. Specifically, GIS asset management system and software to track maintenance and performance of equipment (e.g., replacing filters). What are we doing to track these? Do we need more investment? 33 34 18
May 5thStudy Session Responses35Response: In the 5-Year CIP , capital expenditures are funded by:• customer revenue (79%) • anticipated debt funding (14%) • developer contributions (4% for customer specific projects) • load development fees (2%) • restricted Public Benefits funds (1%) Annual debt service payments are funded by net revenues and have been included in the Electric Utility's long-range financial plan and rate structure. The FY 2026/27 Amended Budget includes $89 million in the Rate Stabilization Reserve, $375 million in the Operation and Maintenance Reserve, and $73 million in the Infrastructure Reserve that could be utilized to buffer any shortfalls. SVP will be conducting a cost-of-service study with a consultant later this year to analyze and update rates to mitigate this type of risk. It should be noted that 94% of customer rate revenue comes from large industrial and commercial customers. Only 5.6% are from residential customers.2. Question: How are we funding the capital expenditures for SVP? How much is funded by debt and what is the plan to pay it off? How much is funded by Load Development Fees? What is the impact if SVP does not generate the demand from data centers and development? May 5thStudy Session Responses36Response: In addition to the two positions in the Proposed Budget, SVP plans to add more positions funded by the Public Benefits Charge (PBC) as part of future budget cycles. SVP designs expenditures around the California Energy Commission (CEC) guidelines and current best utility practice of PBC expenditures that other municipal utilities are implementing. There is a focus on education and outreach, efficient electrification, affordability, low-income, and research & development. Every four years as per AB 2021, SVP sets annual targets for energy efficiency saving and demand reductions over a ten-year period. SVP brought the targets to the City Council on August 26, 2025 (RTC 25-592).SVP has also been drawing down the PBC restricted reserves for larger residential rebates, advanced metering infrastructure and renewable contract affordability. The money can be utilized by the customer classes that contributed to it, per Council Resolution 6425 and now may be subject to Proposition 26. For example, residential customers have contributed approximately 5.5% to 6% to PBC funds, so approximately $3 million of the $50 million can be used to benefit residential customers. 3. Question: There is $50 million available for Public Benefits. Beyond the adding of two positions, please explain how we plan to use and prioritize these funds.35 36 19
37Response: Moving forward with Green Button Connect is dependent on several interconnected systems being upgraded, including the NorthStar billing system. Based on the current timeline, NorthStar is planned to be upgraded starting in Q3-2027 and finished in Q1-2028. Assuming testing and integration with the other systems related to the Advanced Metering Infrastructure (AMI) can be completed in the same timeframe, Green Button Connect would be available at the earliest in Q2-2028. 4. Question: Since implementing Green Button Connect for SVP’s billing system requires an upgrade first, can we prioritize upgrading the billing system so we can move forward with Green Button Connect?Response: The City would need to identify a sustainable funding source, cost recovery strategy, and/or operational model to support recurring annual events. Using the Night Market as an example, the City estimates that approximately $700,000 annually would be needed to support four seasonal (2-night) events per year. This estimate includes staffing and operational support from multiple City departments, including Parks & Recreation, Police, and Public Works, and costs associated with event production, entertainment, booths and equipment, marketing, permits, and other logistical needs. Continuation of these events on a long-term basis would depend on available funding, City priorities, sponsorship opportunities, partnerships, grant funding, and the desired level of service for future events.5. Question: How can we continue community events, such as the night market and Lunar New Year celebration, on an ongoing basis?May 5thStudy Session Responses 38Response: The Bond Program currently has $3 million set aside for a future tranche under the Renovations to Historic Buildings line item. The Department of Public Works (DPW) will be working with a consultant to review the needs of the historic buildings, identify projects, establish budgets, and then prioritize those for implementation. DPW will also be exploring opportunities to advance smaller projects, like the porch, ahead of future tranche issuances. 6. Question: The Berryessa Adobe porch and the Morse Mansion paint are in need of repairs. What is the strategy to fund repairs for these facilities?Response: One-time proceeds from the sale of the Loyalton property of $5.6 million are anticipated to be used to partially offset one-time capital needs in FY 2025/26 associated with major engine overhaul and repairs at the Donald Von Raesfeld (DVR) power plant. Actions will be brought forward to Council prior to the close of the fiscal year to recognize the revenue from the sale and appropriate funding for engine overhaul work which was identified during the DVR planned outage earlier this year. 7. Question: What is the plan to spend the proceeds from the sale of the Loyalton property?May 5thStudy Session Responses37 38 20
39Response: The biennial budget process allows for a more in-depth review of the capital budget or operating budget during its cycle, while also including amendments to the budget that is off cycle. In addition, there are certain elements of the budget that are presented every year, including the Ten-Year General Fund Forecast, all capital and operating source and use statements, and the appropriation ordinance. The two-year budget cycle reduces the administrative staff time for all departments to prepare the budget, provides more funding stability for departments, and allows for better long-range planning and strategic focus. The potential drawbacks of this process are less flexibility during economic downturns and emergencies, the need to revise the plan mid-cycle if there are significant changes to revenues and/or expenditures, and additional time needed to respond to changing priorities. Weighing these benefits and drawbacks, the Administration believes the biennial operating budget process is working.8. Question: With a few cycles completed, is the biennial budget process that alternates between a capital budget and operating budget working? May 5thStudy Session Responses 40Response: As part of each biennial budget process, departments present capital funding needs to the City Manager’s Office, the Finance Department and the Public Works Department for evaluation. The highest priority needs are funded with the resources available taking into consideration heath and safety issues, legal mandates, the condition of the infrastructure, community needs, and departmental feedback/prioritization. There are a number of master plans and studies that also inform the prioritization of projects. Starting with the FY 2019/20 and FY 2020/21 Capital Budget, the document was restructured to provide additional information on the City’s unfunded projects. This was an important step to focus the discussion on this issue. Since that time, the City has pursued funding strategies to address these issues, including bringing forward the General Obligation Bond Measure for voter approval and the set aside of ongoing capital funding in the budget.9. Question: How is the unfunded capital project list prioritized so that infrastructure does not reach a critical point, ensure compliance with legal mandates and health and safety issues are addressed?May 5thStudy Session Responses39 40 21
41Response: As part of governmental accounting, enterprise funds are used to account for operations and activities performed by specific departments in the City; these funds account for City operations financed and operated in a manner similar to a private business enterprise. The cost of providing goods and services are funded primarily through charges to customers for services. The Sewer Utility Fund operates as an enterprise fund, with the operation and maintenance of the Regional Wastewater Facility as one of the primary operating expenses. These costs, along with the other operating expenses for the Sewer Utility (e.g., personnel costs, materials, services, and supplies), are all funded by user charges for sewer services. Any funding surplus is set aside in various reserves, including Rate Stabilization, Operations and Maintenance and Infrastructure. These reserves are set up 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. 10. Question: How are enterprise funds defined and why are the operations associated with the water treatment plant included in this category? How are the funds structured to only cover costs? May 5thStudy Session Responses 42Response: The City receives gas tax revenue from the State that is recorded in the Gas Tax Fund. 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. Given the tax is a fixed amount per gallon, the gas tax receipts will not be impacted by increasing gas prices unless drivers begin to drive less due to those increases. The increasing gas prices may also encourage consumers to switch to electric or hybrid vehicles, which would reduce gas consumption. Increasing gas prices may reduce disposable income for residents and visitors and increase costs for businesses, potentially impacting sales tax and transient occupancy tax receipts. The City would, however, collect higher sales tax receipts from gas stations. 11. Question: As gas prices go up, are we anticipating revenue to go up or down? Are we thinking through that potential impact?Response: The City Auditor position, along with other frozen positions, is a priority to restore prior service levels. The FY 2026/27 Proposed Budget adds a Position Restoration Reserve in the General Fund to support the restoration of previously frozen positions, including the City Auditor position. 12. Question: The City Auditor position is currently frozen/vacant. Is this position a priority?May 5thStudy Session Responses41 42 22
43Response: Completion of bike facilities along El Camino Real includes City and State funding. In the proposed CIP, the El Camino Real Bike Lane project will install Class IV Separated bicycle facilities along El Camino Real, implemented in three phases. Phase I (City funded) includes the design and construction of a Class IV Separated Bikeway, from the Santa Clara/Sunnyvale City limit to Pomeroy Avenue. In Phase II, Caltrans has a planned state-funded project to install Class IV bicycle facilities and construct various intersection pedestrian improvements from Pomeroy Avenue to Lincoln Street. Phase III from Lincoln Street to Portola Avenue at the Santa Clara/San Jose City Limit) is currently unfunded. To implement bike facilities on El Camino Real, street parking is required to be removed. In 2022, City Council approved the removal of parking on El Camino Real (Resolution 22-9047), based on the property outreach and parking study done during the El Camino Real Specific Plan process. The action allows the City to remove parking if a project to build the bike lanes is funded. Of note is that there are five properties along El Camino Real that lack sufficient onsite parking so the Resolution does not include removing parking along those property frontages. 13. Question: There is interest in the completion of the El Camino bike lane. Would these projects be funded by the City or the State? Is there an impact on business parking with the bike lane?May 5thStudy Session Responses 44Response: The addition of an annual General Fund transfer to a new Capital Infrastructure Fund is set at 3% of General Fund expenditures based on the available funding. As part of the fiscal sustainability efforts, staff will work towards increasing these annual contributions.14. Question: Is the 3% funding level for the Capital Infrastructure Fund based on an analysis of funding needs/best practices or does it represent available funding? How could this be increased to 5% similar to the school district?May 5thStudy Session ResponsesResponse: Secured Property Tax receipts include excess ERAF funds (under Proposition 98, a portion of property tax receipts are allocated to the ERAF; once there are sufficient funds to fulfill the obligation to school districts, excess funds are returned to the taxing entities that contributed the funding). The excess ERAF funds are projected at $8.0 million in FY 2026/27. The County has indicated that approximately 18% of these receipts are at risk due to legal challenges. Given this risk, the funds in dispute are set aside in an ERAF Reserve. In FY 2026/27, the reserve contribution totals $1.4 million, bringing the reserve balance to $9.4 million. Depending on the outcome of the legal challenge, the funds in reserve would either be freed up for General Fund use or would be used to cover the City’s portion of the liability. The funds will remain in reserve until the legal challenge is resolved.15. Question: The Proposed Budget sets aside 18% of the Property Tax revenue from the excess Education Revenue Augmentation Fund (ERAF) as the County of Santa Clara has indicated that this amount is at risk due to a legal challenge. In FY 2026/27, the contribution to the ERAF Reserve totals $1.4 million. What will happen to this revenue? 43 44
23 45Response: While the sales tax category is very difficult to project, staff set the sales tax revenue estimate at a level that is expected to be sustainable. The City’s General Fund revenue estimates in total are projected to be sufficient to support the positions included in the Proposed Budget. Staff evaluates sales tax receipts on a quarterly basis by business sector and also considers the forecast provided by the City’s sales tax consultant in the development of the revenue estimates. The consultant developed conservative, most likely, and optimistic revenue estimates through FY 2031/32. For FY 2026/27, the consultant’s conservative estimate totals $74.9 million, the most likely estimate totals $80.5 million, and the optimistic estimate totals $86.2 million. The City’s general sales tax revenue estimate for FY 2026/27 totals $75.0 million, which aligns to the consultant’s conservative estimate. The FY 2026/27 estimate is below the FY 2024/25 actual receipts of $78.5 million because it is assumed that a portion of the high collections in FY 2024/25 was one-time. The 3% annual growth from FY 2026/27 in the forecast is slightly below the City’s actual long-term growth. From FY 2011/12 through FY 2023/24, the annual sales tax growth averaged 3.8%; this excludes the growth of 28.8% in FY 2024/25. The 3% annual growth rate is also below the annual growth projections provided by the sales tax consultant that averaged 4.1% from FY 2026/27 through FY 2031/32.16. Question: Sales Tax revenues for the City are at record levels and are highly volatile. The forecast assumes growth of 3% annual growth from the FY 2026/27 starting point. Is this revenue level sustainable? Is this growth realistic to maintain the ongoing costs of all of the new positions being proposed?May 5thStudy Session Responses 46Question 16 Cont’d. • The City’s sales tax consultant Neumo/MuniServices provided quarterly revenue estimates through Q1 2032May 5thStudy Session Responses 45 46
24 47Response: On June 6, 2023, City Council approved the SV Hopper pilot program and service in Santa Clara launched in November 2023. The pilot will run for four years and is expected to end in November 2027. The pilot program is currently funded by both grant funds and Silicon Valley Power Electric Operating Grant Trust Funds (Low Carbon Fuel Program). Staff is evaluating the program to determine if the program will continue due to potential funding constraints. 17. Question: The SV Hopper is funded as a pilot program. Is this pilot going to sunset or is it anticipated to be funded ongoing. If so, how will it be funded? Response: There are currently two projects proposed in the budget under the Transportation theme, and also money in the Bond Program related to water savings and median islands. The Bond Program currently has $4 million set aside for a future tranche under the Street/Median Island Beautifications line item. The other proposed projects in the budget include Water Conservation and Drought Tolerant Landscaping and Median Island Water Conservation and Drought Tolerant Landscape Improvements. There are currently no stand-alone projects budgeted that will be removing/significantly modifying median islands. These types of improvements are typically reviewed when performing significant roadway modifications like what was recently completed for the Great America Parkway/Mission College Intersection Improvements Project.18. Question: Are there opportunities to remove/revise center dividers for certain streets, resulting in water savings and improved traffic flow? May 5thStudy Session Responses 48Response: As part of the Superbowl LX operations and regional security planning, the Bay Area Host Committee and NFL installed temporary bike lane delineators along Lafayette Street from Agnew Road to Great America Way to support the bicycle detour associated with the temporary closure of the San Tomas Aquino Creek Trail (STACT) and Stars and Stripes Drive. For the upcoming FIFA World Cup matches in June and July 2026, these bike delineators will be temporarily installed again by the Bay Area Hose Committee and there are discussions about them remaining permanent after the matches.19. Question: Bike Lane Delineators were temporarily added around Levi’s Stadium as a safety precaution for the Superbowl and have since been removed. Can these be added back for bicycle safety?Response: In June 2025, City Council approved an initiative to reduce speed limits on certain streets around schools from 25 to 15 miles per hour (mph) when children are present. Under the California Vehicle Code (CVC), this is allowable for streets that are posted 30 mph or less within a school zone. The reduced 15 mph speed limit supports the City’s goal of creating safer streets for children walking and biking to school, as lowering speeds in school zones can reduce both the likelihood and severity of collisions. Installation of 15 mph speed limit signs was completed in late 2025 around the 28 schools that complied with the CVC speed limit requirements.20. Question: Which schools have the 15 MPH zones implemented? Are there plans to expand to other schools?May 5thStudy Session Responses47 48 25
49Response:The City will be releasing a two phase RFQ/RFP for development on the city owned property in Downtown. In order to best evaluate the development proposals received, staff will be utilizing consultants, some of whom would be selected through a new RFP for Downtown consultants. In addition, more support is needed to coordinate and provide strategic direction on the multifaceted Downtown implementation work efforts. The budget need for these added support efforts to prioritize Downtown is $400,000 in FY 2026/27.21. Question: How do we prioritize the Downtown? How do we allocate additional funding?May 5thStudy Session ResponsesResponse: If the City consolidates its offices to include the utility and enterprise funds, those funds will pay their fair share of the cost of the building(s), the tenant improvements, and the ongoing operating and maintenance costs. By combining resources, it may be cost effective for both the General Fund and the enterprise funds. 22. Question: If the City consolidated its offices for utilities/ enterprise funds, would it result in any cost savings to the General Fund? 50Response: While the recent Supreme Court ruling invalidated certain previously imposed reciprocal tariffs, the ruling does not eliminate all tariffs impacting utility-related equipment and materials. Section 232 of the Trade Expansion Act of 1962 is currently being used to authorize tariffs based on national security concerns.On April 2, 2026, a Proclamation was issued strengthening Section 232 tariffs on imported steel, aluminum, and copper products including, but not limited to, articles made entirely or almost entirely of aluminum, steel, or copper are generally subject to a 50% tariff on the full product value; derivative articles substantially made of steel, aluminum, or copper are generally subject to a 25% tariff on the full product value; certain metal-intensive industrial equipment and electrical grid equipment are subject to a reduced 15% tariff through 2027 to support industrial base buildout currently underway across the United States.Accordingly, the Supreme Court ruling is not expected to result in broad tariff savings for SVP at this time. Many utility-related materials used by SVP, including transformers, conductors, switchgear, substation components, poles, and other electrical infrastructure equipment, may continue to experience tariff-related cost impacts due to the steel, aluminum, and copper content.23. Question: Will the recent Supreme Court ruling result in tariff savings for SVP?May 5thStudy Session Responses49 50 26
51Response: The City’s approach to fast-tracking technology implementation is to focus on solutions that deliver clear operational, service, and compliance benefits and can be implemented quickly without sacrificing security, accessibility, or long-term support.Over the past year, the IT Department completed 10 projects as well as over 30 system and application upgrades, demonstrating that the City is moving forward at a strong pace. We have also been deploying advanced tools at an accelerated rate when there is a strong opportunity. For example, DocAccess moved from concept to implementation in less than two months, helping address a large majority of the City’s website ADA compliance concerns in a short timeframe.Looking ahead, we are continuing to identify opportunities to accelerate implementation where solutions are well-defined, practical to deploy, and provide immediate value. We are also evaluating how AI can play a role in every project and solution going forward, where it can improve efficiency, service delivery, analysis, or user experience in a responsible and effective way.24. Question: At the Study Session, there was interest in fast tracking technology implementation. What is the City’s approach and opportunities in this area?May 5thStudy Session Responses 52Response: Public-private partnerships (PPPs) are used to deliver public projects, services or infrastructure, such as public transportation networks (e.g., toll roads), airports, convention centers, and wastewater facilities. These partnerships typically share financial, construction, and operational risks. While these partnerships can be used as a financing mechanism and can leverage private-sector innovation, there are potential disadvantages, including higher long-term costs, reduced public control, and inadequate service delivery. The City does partner with a third-party for the operation of the City’s convention center. Any other potential PPP would have to be carefully analyzed to determine if the potential benefits outweigh the risks.25. Question: Are there public private partnership opportunities?May 5thStudy Session ResponsesResponse: It is projected that FY 2025/26 will end with additional General Fund balance from excess revenues and expenditure savings. In anticipation of additional fund balance, the FY 2026/27 Proposed Budget incorporates an estimate for beginning fund balance totaling $13.9 million (2% of revenues and expenditures) as a funding source. An additional $25 million is projected for FY 2025/26. Staff plans to bring forward actions in June 2026 to allocate approximately $7 million of those additional funds to the Infrastructure Replacement Capital Fund, bringing the funding level to 5% of General Fund expenditures, and to allocate a portion of the additional funding to the Capital Projects Reserve. In addition, the FY 2026/27 revenue estimates have been adjusted, with notable increases in the sales tax, transient occupancy tax, interest earnings, and the SVP transfer from the FY 2026/27 estimates included in the Biennial Operating Budget adopted in June 2025. 26. Question: There are material variances between revenues and expenditures that are budgeted and the actuals at year-end, resulting in additional year-end funds available. How does the administration plan to address this issue? 51 52
27 53Response: These revenue estimates take into account historical collection patterns, economic conditions and other factors that may impact current and future collections, rate/tax adjustments, and feedback from consultants. •Sales Tax – The estimate is based on an analysis of actual performance by economic sector, historical collection levels, the revenue estimates from the City’s sales tax consultant, and the overall economic outlook.•Property Tax – This category includes secured and unsecured property tax. The County 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 estimate is used as the starting point in the development of the FY 2026/27 revenue estimate. The City’s property tax consultant provides a forecasting tool to assist in the development of the estimate. •Transient Occupancy Tax (TOT) – The estimate takes into consideration actual collection patterns and the rate increases implemented in recent years.•SVP Transfer – Silicon Valley Power pays 5.0% of gross revenues to the General Fund. Growth in this category is primarily driven by market projections for electric consumption, resources costs, and projected rate increases for the Electric Utility.27. Question: How are the revenue estimates for sales tax, property tax, transient occupancy tax, and SVP transfer calculated? May 5thStudy Session Responses 54Response: All filled and vacant positions are funded in the budget. To account for vacancies, the budget includes a vacancy factor that reduces the personnel budget by 3% for departments with a total FTE count of over 11, with the exception of the Police Department. As part of the FY 2025/26 and FY 2026/27 Adopted Operating Budget, the Police Department vacancy factor was set at 5.5%, effective through FY 2028/29. The factor is set to revert back to 3% ongoing, beginning in FY 2029/30. Frozen positions are unfunded in the budget. However, there is a Position Restoration Reserve in the General Fund that would be used to restore those positions.28. Question: Are vacant positions or frozen positions funded?May 5thStudy Session ResponsesResponse: Universal Basic Income (UBI) is not a viable use for CDBG/HOME funds because there are significant limitations on how funds can be used. CDBG funds can pay for short-term emergency assistance for three months of rent and utility payments. These funds are paid to a landlord/utility provider on behalf of the individual whereas UBI programs pay funds directly to program participants. CDBG funds do not provide flexibility or the ~1 year timeline that UBI programs typically require. If CDBG funds were to be used for rental or utility assistance, the City could only use funds set aside for public services (capped at just over $150,000 in FY 2026/27). This amount is insufficient and would require a reallocation of funds that were approved in the FY 2026/27 Annual Action Plan on May 5, 2026. HOME funds are restricted to eligible affordable housing production or assistance.29. Question: What would be the options for the City to establish a basic income pilot program? Are CDBG or HOME funds eligible to be allocated to this type of program? 53 54
28 55Response: At this time, the Senior Center charges membership and recreation activity fees to help offset a portion of the costs associated with operating the facility and providing programs and services to the community. Based on historical trends, Senior Center fee revenue is projected at approximately $356,000 in FY 2025/26, while FY 2026/27 revenue is projected to be approximately $363,000, depending on future fee adjustments.In comparison, the annual cost to operate the Senior Center and its programs exceeds $1 million. While the current fees are intended to support cost recovery, the revenue generated does not fully cover the operational costs of the facility and programs. As a result, eliminating Senior Center fees would create an additional funding gap and would likely require the identification of an alternative ongoing funding source, such as additional General Fund support, to maintain current service levels and programming.30. Question: (Public): Is there going to be a time when seniors in the community do not have to pay fees (Senior Center)? May 5thStudy Session Responses 5656
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City Council MeetingItem #1: Review of the Proposed FY 2026/27 & FY 2027/28 Biennial Capital Improvement Program Budget and FY 2026/27 Operating Budget ChangesMay 19, 202657