Agenda packet — City Council and Authorities Concurrent, June 9, 2026 (part 8 of 11)

RESOLUTION NO. 26-XXX

A RESOLUTION OF THE CITY OF SANTA CLARA,

CALIFORNIA, AMENDING CITY RATE SCHEDULES FOR
WATER UTILITY SERVICE EFFECTIVE JULY 1, 2026
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 9, 2026 was mailed to 23,487water utility customers on April 21, 2026, which satisfies Article XIII D’s notice requirement; WHEREAS, the Council has reviewed the Water Rate Schedule 2026-01 and Recycled Water Rate Schedule 2026-02 (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 9, 2026, the Council conducted a public hearing on the proposed adjustments to rates for water service, and there was no majority protest. //
Resolution/Establishing Water Rate Schedule 2026-01
& Recycled Water Rate Schedule 2026-02
Rev: 11/22/17

Page 2 of 3 ends

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

1. 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.

2. That Water Rate Schedule 2026-01 and Recycled Water Rate Schedule 2026-02, attached to this Resolution and incorporated by this reference, are hereby adopted and shall be effective on July 1, 2026.
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Resolution/Establishing Water Rate Schedule 2026-01
& Recycled Water Rate Schedule 2026-02
Rev: 11/22/17

Page 3 of 3 ends

3. 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, 2026, and each subsequent billing cycle thereafter as set forth in Water Rate Schedule 2026-01 and Recycled Water Rate 2026-02.

4. 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 9TH DAY OF JUNE, 2026, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES: COUNCILORS: None
ABSENT: COUNCILORS: None
ABSTAINED: COUNCILORS: None
ATTEST:

Attachments incorporated by reference:

1. Water Rate Schedule 2026-01

2. Recycled Water Rate Schedule 2026-02
City of Santa Clara Water Rate Schedule 2026-01 Page 1 of 2

CITY OF SANTA CLARA
WATERRATESCHEDULE 2026-01
(Replaces Water Rate Schedule 2025-01)
ADOPTED BY RESOLUTION NO. 26-XXX, June 9, 2026
RATE W-1, METERED POTABLE WATER SERVICE
Applicable to allmetered potable water service provided by the City of Santa Clara (1) MONTHLY QUANTITY CHARGES:

All potable water use, $11.09 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 29.78
1 inch 46.69
1 ½ inch 88.97
2 inch 139.71
3 inch 275.01
4 inch 427.23
6 inch 850.05
8 inch 1,357.44
10 inch 2,033.95
RATE W-2, FIRE SERVICE
(1) MONTHLY FIRE SERVICE CHARGE:

SERVICE SIZE MONTHLY CHARGE($)
2 inch 4.09
4 inch 23.16
6 inch 68.13
8 inch 145.11
10 inch 260.92
12 inch 421.70
City of Santa Clara Water Rate Schedule 2026-01 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 9.48
2 inch 15.17
3 inch 30.33
4 inch 47.39
6 inch 94.79
8 inch 151.66
10 inch 227.49
City of Santa Clara Recycled Water Rate Schedule 2025-02 Page 1 of 2

CITY OF SANTA CLARA
RECYCLEDWATER RATESCHEDULE 2026-02
(Replaces Recycled Water Rate Schedule 2025-02)
ADOPTED BY RESOLUTION NO. 26-XXX, June 9, 2026
RATE RW-1, METERED RECYCLED WATER SERVICE
Applicable to allmetered 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: $6.05 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 21.48
1 inch 34.91
1 ½ inch 68.47
2 inch 108.75
3 inch 216.16
4 inch 337.00
6 inch 672.65
8 inch 1,075.44
10 inch 1,612.49
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.

City of Santa Clara Recycled Water Rate Schedule 2026-02 Page 2 of 2 (1) MONTHLY FIRE SERVICE CHARGE:

SERVICE SIZE MONTHLY CHARGE($)
2 inch 4.09
4 inch 23.16
6 inch 68.13
8 inch 145.11
10 inch 260.92
(2) SPECIAL CONDITIONS:

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 9.48
2 inch 15.17
3 inch 30.33
4 inch 47.39
6 inch 94.79
8 inch 151.66
10 inch 227.49
Resolution No. 26-xxx/Sewer Rate Schedule (S-26)
Rev: 11/22/17

Page 1 of 3 ends

RESOLUTION NO. 26-XXX

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA,

AMENDING THE CITY RATE SCHEDULE FOR SEWER UTILITY
SERVICES EFFECTIVE JULY 1, 2026
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 9, 2026 was mailed to 23,487 utility customers on April 21, 2026, which satisfies Article XIII D’s notice requirement; WHEREAS, the Council has reviewed the Sewer Rate Schedule S-26 (attached) and incorporated into this Resolution by reference;
WHEREAS, the amounts shown on the Schedule S-26 reflect the actual costs to provide utility services; and,
WHEREAS, on June 9, 2026, the Council conducted a public hearing on the proposed adjustments to rates for water service, and there was no majority protest.

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

Resolution No. 26-xxx/Sewer Rate Schedule (S-26)
Rev: 11/22/17

Page 2 of 3 ends

1. 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:

A. The revenues derived from the Sewer Rates, as stated in the attached Schedule S-26, 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.

2. That Sewer Rate Schedule S-26, attached to this Resolution and incorporated by this reference, are hereby adopted and shall be on July 1, 2026. //
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Resolution No. 26-xxx/Sewer Rate Schedule (S-26)
Rev: 11/22/17

Page 3 of 3 ends

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

Commencing with the billing cycle for sewer service provided on or after July 1, 2026, and each subsequent billing cycle thereafter as set forth in Sewer Rate Schedule S-26.

4. 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 9TH DAY OF JUNE, 2026, BY THE FOLLOWING VOTE: AYES:

COUNCILORS:

NOES:

ABSENT:

COUNCILORS:

ABSTAINED: COUNCILORS:

ATTEST:

Attachments incorporated by reference:

1. Sewer Rate Schedule S-26
Sewer Rate Schedule S-25 Page 1 of 3
SCHEDULE S-26

MONTHLY SEWER SERVICE CHARGES
EFECTIVE JULY 1, 2026
(REPLACES SCHEDULE S-25)
A. Residential Users:

Single Family dwelling units including accessory dwellings: $64.46 per month Multiple dwelling unit structures including, but not limited to, duplexes, retirement homes, mobile home courts, college dormitories, and apartments: $58.26 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 $23.23 70% 211112, 325:XXX Industrial Chemical $16.36 90%
332812, 332813 Metal Plating $4.08 90%
332XXX, 333:XXX,
3341 IX, (excepting 332812,
332813, 333314)
Machinery Manufacturers
$12.36
90%
334XXX, 335XXX, 33632X
(excepting 33451X, 33411X,
334611)
Electric & Electronic Equip. $5.71 90%
4411XX, 4412XX, 4471XX Auto Dealers & Service Station $9.45 90% 722110, 722410 Restaurants $23.48 90%
721XXX Motels & Hotels $9.19 90%
561740, 811490, 8123XX Laundries $6.99 90%
1References the volume ofsewage discharged. HCF=one hundred cubic feet=748 gallons Sewer Rate Schedule S-26 Page 2 of 3
811lXX, 812930 Repair Shops & Car Washes $7.64 90%
713:XXX Amusement Parks $7.17 90%
621:XXX, 622XXX,
623:XXX Hospitals & Convalescent Homes $8.30 90%
611:XXX Schools & Colleges $7.92 24%
8131XX Churches $5.71 35%
Commercial/Industrial/Miscellaneous not otherwise specified in this schedule of charges
$6.83 90%
In no case shall the minimum charge be less than $64.46 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:

BOD2:
$836,642 per million gallons per day of flow capacity
$192,912 per 1,000 pounds per day of BOD removal
capacity SS3: $275,578 per 1,000 pounds per day of SS removal capacity NH3
4 : $392,517 per 1,000 pounds per day of NH3 removal capacity Operating and Maintenance Cost Recovery:

Volume:

BOD:

SS:

NH3:
$3,637.30 per million gal
$1,012.99 per 1,000 pounds
$1,156.19 per 1,000 pounds
$9,205.87 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: NH3 in parts per million x 8.34 x volume in million gallons = pounds of Ammonia.

Sewer Rate Schedule S-26 Page 3 of 3
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 FINAL

WATER AND SEWER RATE STUDY
BLACK & VEATCH PROJECT NO. 410918

PREPARED FOR
City of Santa Clara, CA
9 JUNE 2026
~ -BLACK&VEATCH
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents i
Table of Contents
Legal Notice..................................................................................................................................................................1

1.0 Executive Summary ...................................................................................................................................1-1

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

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

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

1.4 Financial Plan.................................................................................................................................1-1

1.4.1 Water Utility .................................................................................................................1-2

1.4.2 Recycle Water Utility ...................................................................................................1-3

1.4.3 Sewer Utility.................................................................................................................1-4

1.5 Adequacy of Existing Rates to Meet Costs of Service...................................................................1-6

1.6 Cost of Service Analysis................................................................................................................1-6

1.7 Rate Design....................................................................................................................................1-7

1.7.1 Water and Recycled Water Utilities..............................................................................1-7

1.7.2 Sewer Utility.................................................................................................................1-9 Water and Recycled Water Utilities........................................................................................................................1-1

2.0 Revenue and Revenue Requirements .......................................................................................................2-1

2.1 Customer and Water Consumption ................................................................................................2-1

2.1.1 Customer Classes..........................................................................................................2-1

2.1.2 Minimum Bills..............................................................................................................2-1

2.1.3 Water Consumption ......................................................................................................2-2

2.2 Revenue under Existing Rates .......................................................................................................2-3

2.3 Other Revenue ...............................................................................................................................2-5

2.4 Operating and Maintenance Expenses ...........................................................................................2-5

2.5 Capital Improvement Program.......................................................................................................2-6

2.5.1 Capital Improvement Financing Plan ...........................................................................2-7

2.6 Transfers ........................................................................................................................................2-8

2.7 Reserves.........................................................................................................................................2-8

2.8 Projected Operating Results...........................................................................................................2-9

3.0 Cost of Service Analysis.............................................................................................................................3-1

3.1 Functional Cost Components.........................................................................................................3-2

3.2 Allocation to Cost Components.....................................................................................................3-3

3.2.1 System Base, Max Day, and Max Hour Allocations.....................................................3-3

3.2.2 Allocation of Operating and Maintenance Expenses....................................................3-4

3.2.3 Allocation of Capital Investments.................................................................................3-5

3.3 Units of Service..............................................................................................................................3-5

3.4 Cost of Service Allocations............................................................................................................3-6

3.4.1 Units Costs of Service...................................................................................................3-6

3.4.2 Distribution of Costs of Service to Customer Classes ..................................................3-6

4.0 Rate Design .................................................................................................................................................4-1 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents ii

4.1 Existing Rates ................................................................................................................................4-1

4.2 Proposed Rates...............................................................................................................................4-1

4.2.1 Monthly Service Charge ...............................................................................................4-1

4.2.2 Fire Service ...................................................................................................................4-3

4.2.3 Cross Connection..........................................................................................................4-3

4.2.4 Consumption Charge ....................................................................................................4-4

4.3 Typical Monthly Costs under Proposed Charges...........................................................................4-4

4.4 Neighboring Water Utilities...........................................................................................................4-5 Sewer Utility..............................................................................................................................................................4-1

5.0 Revenue and Revenue Requirements .......................................................................................................5-1

5.1 Customer and Water Consumption Projections .............................................................................5-1

5.1.1 Customer Classes..........................................................................................................5-1

5.1.2 Equivalent Dwelling Units............................................................................................5-1

5.1.3 Minimum Bills..............................................................................................................5-2

5.1.4 Contributed Sewage Flow.............................................................................................5-2

5.1.5 Major Users...................................................................................................................5-3

5.2 Revenue under Existing Rates .......................................................................................................5-3

5.3 Other Revenue ...............................................................................................................................5-5

5.4 Operating and Maintenance Expenses ...........................................................................................5-5

5.5 Debt Service Requirements............................................................................................................5-6

5.6 Capital Improvement Program.......................................................................................................5-6

5.6.1 Capital Improvement Financing Plan ...........................................................................5-7

5.7 Transfers ........................................................................................................................................5-8

5.8 Reserves.........................................................................................................................................5-8

5.9 Projected Operating Results...........................................................................................................5-8

6.0 Cost of Service Analysis.............................................................................................................................6-1

6.1 Functional Cost Components.........................................................................................................6-1

6.2 Allocation to Cost Components.....................................................................................................6-2

6.2.1 Volume and Strength Allocations.................................................................................6-2

6.2.2 Allocation of Operating and Maintenance Expenses....................................................6-2

6.2.3 Allocation of Capital Investments.................................................................................6-4

6.3 Units of Service..............................................................................................................................6-4

6.4 Cost of Service Allocations............................................................................................................6-5

6.4.1 Units Costs of Service...................................................................................................6-5

6.4.2 Distribution of Costs of Service to Customer Classes ..................................................6-5

7.0 Rate Design .................................................................................................................................................7-1

7.1 Existing Rates ................................................................................................................................7-1

7.2 Proposed Rates...............................................................................................................................7-1

7.2.1 Monthly Service Charge ...............................................................................................7-1

7.2.2 Consumption Charge ....................................................................................................7-1

7.2.3 Major Users...................................................................................................................7-2 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents iii

7.3 Typical Monthly Costs under Proposed Charges...........................................................................7-4

7.4 Neighboring Sewer Utilities...........................................................................................................7-4 Appendix A – Ten-Year Financial Plan..................................................................................................................7-1 Water Utility.................................................................................................................................................7-1 Recycled Water Utility.................................................................................................................................7-2 Sewer Utility ................................................................................................................................................7-3

LIST OF TABLES
Table 1-1 Proposed Revenue Adjustments.....................................................................................................1-6 Table 1-2 Proposed Three-Year Water Rate Schedule...................................................................................1-8 Table 1-3 Proposed Three-Year Recycled Water Rate Schedule ...................................................................1-9 Table 1-4 Proposed Three-Year Sewer Rate Schedules...............................................................................1-10 Table 2-1 Minimum Bills...............................................................................................................................2-1 Table 2-2 Billed Water Consumption.............................................................................................................2-3 Table 2-3 Existing Water and Recycled Water Rates ....................................................................................2-4 Table 2-4 Projected Revenue under Existing Rates .......................................................................................2-4 Table 2-5 O&M Expenses..............................................................................................................................2-6 Table 2-6 Capital Improvement Projects........................................................................................................2-7 Table 2-7 Construction Fund Financing Plan (Water) ...................................................................................2-7 Table 2-8 Construction Fund Financing Plan (Recycled Water)....................................................................2-8 Table 2-9 Operating Fund (Water)...............................................................................................................2-12 Table 2-10 Operating Fund (Recycled Water) ...............................................................................................2-13 Table 3-1 Cost of Service Revenue from Rates (Water) ................................................................................3-1 Table 3-2 Cost of Service Revenue from Rates (Recycled Water) ................................................................3-2 Table 3-3 Allocation of O&M Expenditures (Water).....................................................................................3-4 Table 3-4 Allocation of O&M Expenditures (Recycled Water).....................................................................3-4 Table 3-5 Allocation of Capital Costs (Water)...............................................................................................3-5 Table 3-6 Allocation of Capital Costs (Recycled Water)...............................................................................3-5 Table 3-7 Units of Service (Water and Recycled Water) ...............................................................................3-1 Table 3-8 Units Cost of Service (Water)........................................................................................................3-1 Table 3-9 Distribution of Costs to Customer Classes (Water) .......................................................................3-2 Table 3-10 Units Cost of Service (Recycled Water) ........................................................................................3-3 Table 3-11 Distribution of Costs to Customer Classes (Recycled Water)........................................................3-3 Table 4-1 Costs within the Minimum Monthly Service Charge for FY 2026 (Water)...................................4-1 Table 4-2 Proposed Minimum Monthly Service Charge (Water) ..................................................................4-2 Table 4-3 Costs within the Minimum Monthly Service Charge for FY 2025 (Recycled Water)...................4-2 Table 4-4 Proposed Minimum Monthly Service Charge (Recycled Water)...................................................4-2 Table 4-5 Costs within the Fire Service Charge for FY 2026 ........................................................................4-3 Table 4-6 Proposed Fire Service Charge ........................................................................................................4-3 Table 4-7 Costs within the Cross-Connection Charge for FY 2026...............................................................4-3 Table 4-8 Proposed Cross Connection Charge ...............................................................................................4-4 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Table of Contents iv
Table 4-9 Proposed Consumption Charges....................................................................................................4-4 Table 4-10 Typical Monthly Bill (Water) ........................................................................................................4-5 Table 4-11 Typical Monthly Bill (Recycled Water).........................................................................................4-5 Table 5-1 EDUs..............................................................................................................................................5-1 Table 5-2 Minimum Monthly Service Bills ...................................................................................................5-2 Table 5-3 Contributed Sewage Flow..............................................................................................................5-3 Table 5-4 Existing Sewer Rates .....................................................................................................................5-4 Table 5-5 Projected Revenue under Existing Rates .......................................................................................5-5 Table 5-6 O&M Expenses..............................................................................................................................5-6 Table 5-7 Long-Term Debt Service ...............................................................................................................5-6 Table 5-8 Capital Improvement Projects........................................................................................................5-7 Table 5-9 Construction Fund Financing Plan.................................................................................................5-7 Table 5-10 Operating Fund (Sewer)...............................................................................................................5-11 Table 6-1 Cost of Service Revenue from Rates..............................................................................................6-1 Table 6-2 Allocation of O&M Expenditures..................................................................................................6-4 Table 6-3 Allocation of Capital Costs............................................................................................................6-4 Table 6-4 Units of Service..............................................................................................................................6-1 Table 6-5 Units Cost of Service .....................................................................................................................6-1 Table 6-6 Distribution of Costs to Customer Classes.....................................................................................6-1 Table 7-1 Proposed Monthly Service Charge.................................................................................................7-1 Table 7-2 Proposed Consumption Charges....................................................................................................7-2 Table 7-3 Proposed Major User Charges .......................................................................................................7-4 Table 7-4 Typical Monthly Bill......................................................................................................................7-4

LIST OF FIGURES
Figure 1-1 Water Operating Cashflow.............................................................................................................1-3 Figure 1-2 Water Reserves ..............................................................................................................................1-3 Figure 1-3 Recycled Water Operating Cash Flow...........................................................................................1-4 Figure 1-4 Recycled Water Reserves...............................................................................................................1-4 Figure 1-5 Sewer Operating Cash Flow...........................................................................................................1-5 Figure 1-6 Sewer Reserves..............................................................................................................................1-6 Figure 2-1 Water Sales ....................................................................................................................................2-2 Figure 2-2 Status Quo Operating Cash Flow (Water)......................................................................................2-9 Figure 2-3 Status Quo Operating Cash Flow (Recycled Water)....................................................................2-10 Figure 2-4 Water Operating Cash Flow.........................................................................................................2-14 Figure 2-5 Recycled Water Operating Cash Flow.........................................................................................2-14 Figure 4-1 Comparison to Neighboring Water Utilities ..................................................................................4-6 Figure 5-1 Status Quo Operating Cash Flow...................................................................................................5-9 Figure 5-2 Sewer Operating Cash Flow.........................................................................................................5-12 Figure 7-1 Comparison to Neighboring Sewer Utilities ..................................................................................7-6 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Legal Notice LN-1
Legal Notice
Black & Veatch Corporation (Black & Veatch) has prepared this report for the City of Santa Clara (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, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-1

1.0Executive Summary
The City of Santa Clara commissioned Black & Veatch Corporation 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 over 26,952 residential, commercial, irrigation, schools, and agricultural 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, 26 wells, and 3 booster pump stations.

1.2 Recycled Water System
The Recycled Water Utility, operating since 1989, provides recycled water services to over 292 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 over 26,710 residential, commercial, industrial, and municipal customers. Services include the construction and maintenance of the sewer system and installing sewer lateral cleanouts 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 waste from seven agencies in Santa Clara County and can treat 167 million gallons a day (MGD) of liquid waste.

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.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-2
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, 2026 and ending June 30, 2036. This report will focus on a three-year planning period for discussion, beginning July 1, 2026 and ending June 30, 2029. 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 encourage conservation measures of maintaining a 15% voluntary water use reduction and the City’s Water Shortage Contingency Plan.

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 $75.2M in FY 2027 to $87.7M in FY 2029. Water production and water purchases account for most of this increase, representing an average of 66.8% of O&M expenses.  Debt Service: The Water Utility has no existing debt service, and no future debt is planned.  Capital Improvements: The Water Utility plans to execute an average of $5.3M annually in capital projects from FY 2027 to FY 2029.
 Reserves: The Water Utility plans to continue funding the operating reserve, construction fund, and rate 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 the average for the following two-year 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 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.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-3
Figure 1-1 Water Operating Cashflow
Figure 1-2 Water Reserves

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 $12.7M in FY 2027 to $15.3M in FY 2029. Recycled water purchase costs constitute most of the increase, averaging 83.1% of O&M expenses.
 Debt Service: The Recycled Water Utility has no existing debt service, and no future debt is planned.  Capital Improvements: The Recycled Water Utility plans to execute an average of $53.6k annually in capital projects from FY 2027 to FY 2029.
 Reserves: The City plans to continue funding the operating reserve, construction fund reserve, and rate stabilization reserve.

Water Utility - Operating Fund
V, $120.0
C
0 $100.0
2:
$80.0
$60.0
$40.0
$20.0
$0.0
2027 2028
- O&M - Debt Service - capital Projects - Rate Stabilization - Revenue "' $50.0
§ $45.0
$40.0
2: $35.0
$30.0
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
Water Utility - Reserves
2027 2028
■ Operating ■ Capital ■ Rate Stabilization ■ Pension Stabilization 2029
Cash Balance
2029
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-4
● The operating reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
● The construction fund is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is the average for the following two-year 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 Recycled Water Utility is proposing revenue adjustments and drawing down 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 Recycled Water Operating Cash Flow
Figure 1-4 Recycled Water Reserves

1.4.3 Sewer Utility
The Sewer Utility’s revenue requirements are summarized below:

Vl $18.0
.§ $16.0
~ $14.0
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
Recycled Water Program - Operating Fund
2027 2028 2029
- O&M - Debt Service - Capital Projects - Rate Stabilization -.-Revenue - cash Ba lance Recycled Water Utility - Reserves
V, $7.0
C
0 $6.0
~ $5.0
$4.0
$3.0
$2.0
$1.0
$0.0
2027 2028 2029
■ Operating ■ Capital ■ Rate Stabilization ■ Pension stabilization City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-5
 Operation and Maintenance Expenses: The Sewer Utility anticipates O&M expenses to increase from $44.2M in FY 2027 to $46.5M in FY 2028. RWF-related costs represent an average of 69.2% of O&M expenses.
 Debt Service: The Sewer Utility anticipates an average debt service payment of $4.8M annually from FY 2027 to FY 2029 associated with existing and proposed debt issuances. The City anticipates a new revenue bond for $15.5M to be issued in 2027 and another for $12.5M in 2029.  Capital Improvements: The Sewer Utility plans to execute an average of $28.7M annually in capital projects from FY 2027 to FY 2029.
 Reserves: The Sewer Utility plans to continue funding the operating reserve, construction fund, rate stabilization fund reserve, and pension stabilization reserve. ● The operating reserve is to help cover fluctuations in day-to-day expenses. The scheduled target is 90 days of O&M expenses.
● The construction fund is to help maintain enough funds on hand to help mitigate unexpected capital costs. The scheduled target is the average for the following two years City CIP. ● The rate stabilization 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 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 1-5.

Figure 1-5 Sewer Operating Cash Flow
Sewer Utility - Operating Fund
V, $80.0
C
0 $70.0
·-
~ $60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
2027 2028 2029
- O&M - Debt Service - Capital Projects - Rate Stabilization - Revenue cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-6
Figure 1-6 Sewer Reserves

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 2027 to FY 2029. These do not represent proposed rate increases for 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 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 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 & FY 2027 July 13.00% 14.00% 8.75%
FY 2028 July 3.00% 14.00% 11.00%
FY 2029 July 3.00% 13.00% 9.00%
Recycled
Water
Sewer
Fiscal Year Utility
Water
Utility
Effective
Month
Sewer Utility - Reserves
V, $120.0
C
0 $100.0
2:
$80.0
$60.0
$40.0
$20.0
$0.0
2027 2028 2029
■ Operating ■ Capital ■ Replacement and Improvement ■ Rate Stabilization ■ Pension stabilization ■ Litigation City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-7
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 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.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-8
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 2027 FY 2028 FY 2029
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 29.78 30.12 31.50
1" 46.69 47.16 49.47
1-1/2" 88.97 89.76 94.40
2" 139.71 140.88 148.32
3" 275.01 277.19 292.10
4" 427.23 430.55 453.85
6" 850.05 856.54 903.16
8" 1,357.44 1,367.73 1,442.33
10" 2,033.95 2,049.31 2,161.22
12" 2,858.45 2,879.99 3,037.37
Fire Service ($/Month) $/month $/month $/month
2" 4.09 4.15 4.20
4" 23.16 23.50 23.79
6" 68.13 69.13 69.98
8" 145.11 147.24 149.06
10" 260.92 264.75 268.03
12" 421.70 427.89 433.19
Cross Connection ($/Month) $/month $/month $/month
1" 9.48 9.88 9.89
2" 15.17 15.81 15.82
3" 30.33 31.61 31.64
4" 47.39 49.39 49.44
6" 94.79 98.79 98.89
8" 151.66 158.06 158.22
10" 227.49 237.09 237.33
$/HCF $/HCF $/HCF
Consumption Charges ($/HCF)
General Customer 11.09 11.43 11.78
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-9
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.  Consumption Charge: The Sewer Utility should retain its uniform consumption charges for each nonresidential 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.

Proposed
Customer Class FY 2027 FY 2028 FY 2029
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 21.48 24.54 27.76
1" 34.91 39.94 45.26
1-1/2" 68.47 78.45 89.01
2" 108.75 124.65 141.52
3" 216.16 247.86 281.52
4" 337.00 386.47 439.02
6" 672.65 771.50 876.54
8" 1,075.44 1,233.53 1,401.55
10" 1,612.49 1,849.58 2,101.57
12" 2,267.02 2,600.38 2,954.72
Recycled Water Utility
General Customers 6.05 6.90 7.79
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Executive Summary 1-10
Table 1-4 Proposed Three-Year Sewer Rate Schedules
Proposed
Customer Class 2027 2028 2029
$/mo $/mo $/mo
Monthly Service Charge ($/EDU)
Single Family 64.46 70.97 78.36
Multi-Family 58.26 64.32 70.94
Minimum Commercial Bill Charge ($/Month)
All Customers 64.46 70.97 78.36
Commodity Charge ($/HCF) $/HCF $/HCF $/HCF
Amusement Parks 7.17 8.16 8.71
Auto Dealers & Service Station 9.45 10.39 11.09
Churches 5.71 6.62 6.98
Com/Ind/Misc 6.83 7.79 8.29
Electric & Electronic Equip. 5.71 6.69 7.11
Food and Kindred Products 23.23 24.22 26.19
Hospitals & Convalescent Homes 8.30 9.27 9.91
Industrial Chemical 16.36 17.39 18.72
Laundries 6.99 8.01 8.51
Machinery Manufacturers 12.36 13.25 14.20
Metal Plating 4.08 4.99 5.20
Motels & Hotels 9.19 10.18 10.90
Repair Shops & Car Washes 7.64 8.48 9.00
Restaurants 23.48 24.44 26.46
Schools & Colleges 7.92 8.79 9.41
Major Users
Operating and Maintenance Cost Recovery
Volume (per MG) 3,637.30 5,232.79 5,529.11
BOD [2] (per 1,000 lbs) 1,012.99 979.38 1,115.40
SS [3] (per 1,000 lbs) 1,156.19 1,117.90 1,273.11
NH3 [4] (per 1,000 lbs) 9,205.87 8,898.08 10,136.00
Annual Capital Cost Recovery
Volume (per MGD) 836,642 751,626 780,139
BOD [2] (per 1,000 lbs/day) 192,912 203,528 206,008
SS [3] (per 1,000 lbs/day) 275,578 291,699 295,648
NH3 [4] (per 1,000 lbs/day) 392,517 390,806 385,428
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Water and Recycled Water Utilities 2-1 Water and Recycled Water Utilities

2.0Revenue 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

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 26,952 customers and recycled water services to 292 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 average of 0.2% for the Water Utility and increase by an average of 1.0% for the Recycled Water Utility.

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

Table 2-1 Minimum Bills
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
(Bills) (Bills) (Bills)
Water Utility
1 General Customers 51,526 51,654 51,783
2 Total 51,526 51,654 51,783
Recycled Water Utility
3 General Customers 813 821 829
4 Total 813 821 829
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-2

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. 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 then moved to Level 2 in conjunction with Valley Water. In July 2023, after increased rainfall, the City rescinded Level 2 and have returned to normal. Despite operating under normal conditions, the City and Valley Water work together to maintain a 15% voluntary water use reduction as water conditions change.

Figure 2-1 below represents the population growth and a decline in water consumption. Many factors have contributed to the City’s steady decline in consumption despite the increase in population. 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 incentives to customers and works with Valley Water on other outreach and rebate programs for water conservation. Expanding the use of recycled water to existing and new customers has also been 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 Water Sales
While recognizing the City’s water conservation goals, the City still anticipates consumption to increase by 2.5% annually for the Water Utility and 1.0% annually for the Recycled Water Utility over the Study period. The City is experiencing new development which contribute to the increase in water consumption. The City currently bills water consumption in hundred cubic feet (HCF) and only charges for consumption more than the allowance. 135,000 10,000
125,000
9,000
c:, C:
0 ~ 115,000 ~
::I
C.
0 a. 105,000
8,000 :l:
-Ill
C:
7,000 -2
io
(!)
C:
6,000 .2
95,000 :l:
5,000
85,000 4,000
Year
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-3
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 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. (Section left intentionally blank)
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
(HCF) (HCF) (HCF)
Water Utility
1 General Customers 7,071,871 7,248,667 7,429,884
2 Total Usage (HCF) 7,071,871 7,248,667 7,429,884
3 Total Usage (AF) 16,235 16,641 17,057
Recycled Water Utility
4 General Customers 1,775,791 1,793,549 1,811,484
5 Total Usage (HCF) 1,775,791 1,793,549 1,811,484
6 Total Usage (AF) 4,077 4,117 4,159
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-4
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 recycled water over the Study period in conjunction with the increase in the number of minimum bills and water consumption. The projected Water Utility revenues will increase from $75.5M from FY 2027 to $79.1M in FY 2029, while the projected Recycled Water Utility revenue increases from $9.5M in FY 2027 to $9.7M in FY 2029, reflecting an overall increase of 4.7% and 2.0%, respectively over the three-year Study period.

Table 2-4 Projected Revenue under Existing Rates
All City All City All City
FY 2026 FY 2026 FY 2026
Water Recycled Water
Minimum Monthly Meter Rates ($/mo) ($/mo) Consumption Charges 5/8" x 3/4" 26.46 17.80 Water Utility ($/HCF)
1" 41.70 General Customers 29.07 9.89
1-1/2" 79.79 57.26
2" 125.50 91.08 Recycled Water Utility ($/HCF)
3" 247.40 General Customers 181.27 5.43
4" 384.53 282.74
6" 765.46 564.59
8" 1,222.58 902.82
10" 1,832.07 1,353.78
12" 2,574.88 1,903.40
Fire Service Charges ($/mo)
2" 3.50
4" 19.83
6" 58.33
8" 124.24
10" 223.42
12" 361.08
Cross Connection Charges ($/mo)
1" 7.47
2" 11.95
3" 23.89
4" 37.33
6" 74.66
8" 119.46
10" 179.19
Description Description Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
Water Utility
1 General Customers 72,937,500 74,701,800 76,510,400
2 Fire Service 1,263,800 1,265,000 1,266,300
3 Cross Connection 1,344,800 1,346,200 1,347,500
4 Total $ 75,546,100 $ 77,313,000 $ 79,124,200
Recycled Water Utility
5 General Customers 9,524,600 9,619,900 9,716,000
6 Total $ 9,524,600 $ 9,619,900 $ 9,716,000
Line No. Description
I
----
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-5

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 an average of 3.6% of the Water Utility’s total revenue and an average of 9.5% 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 3.7% annually for the Water Utility and an average of 5.8% annually for the Recycled Water Utility from FY 2027.

Water supply costs include water produced and water purchased 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 approximately 53% 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 21.3% 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 22.2% over the Study period.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-6
Table 2-5 O&M Expenses
As shown in Table 2-5, the Water Utility’s O&M expenses increase from $75.2M in FY 2027 to $87.7M in FY 2029, while the Recycled Water Utility’s O&M expenses increase from $12.7 in FY 2027 to $15.3M in FY 2029.

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 2027 through FY 2029. The Water Utility is projecting $15.8M in CIP, and the Recycled Water Utility is projecting $160.9k 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.

Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
Water Utility
1 Salaries 6,414,200 6,824,800 7,056,800
2 Benefits 4,089,000 4,150,200 4,316,300
3 Materials/Services/Supplies 4,977,221 5,067,966 5,160,230 4 Interfund Services 10,318,400 10,756,400 11,224,400
5 Resource & Production 49,261,800 54,052,200 59,749,800 6 Capital Outlay 156,100 159,200 162,400
7 Total $ 75,216,721 $ 81,010,766 $ 87,669,930
Recycled Water Utility
8 Salaries 889,700 940,500 978,100
9 Benefits 562,300 568,200 589,600
10 Materials/Services/Supplies 40,700 41,500 42,300
11 Interfund Services 727,300 797,100 875,500
12 Resource & Production 10,468,600 11,574,800 12,794,200 13 Capital Outlay 0 0 0
14 Total $ 12,688,600 $ 13,922,100 $ 15,279,700
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-7
Table 2-6 Capital Improvement Projects

2.5.1 Capital Improvement Financing Plan
The City funds annual expenditure 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 $5.3M for the Water Utility and $53.6k 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 2027 FY 2028 FY 2029
($) ($) ($)
Water Utility
1 7005 Buildings and Grounds 103,500 107,200 111,000
2 7054 Distribution System
Replacement/Restoration 3,106,100 3,215,900 3,329,600
3 7057 Asset Management Program 0 0 0
4 7058 SCADA Improvements 362,400 268,000 111,000
5 7059 New and Replacement Wells 1,863,700 1,929,600 333,000 6 PW Paving Project Support 310,600 321,600 333,000
7 Total $ 5,746,300 $ 5,842,300 $ 4,217,600
Recycled Water Utility
8 7505 Recycled Water System Mains and
Services 51,800 53,600 55,500
9 Total $ 51,800 $ 53,600 $ 55,500
Line No. Description
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
Source of Funds
1 Intra Transfer In - Debt Financing 0 0 0
2 Intra Transfer In - Customer Service Charge 7,900,000 5,200,000 5,000,000 3 Connection Charges 0 0 0
4 Developer Contributions 0 0 0
5 Total Sources $ 7,900,000 $ 5,200,000 $ 5,000,000
Use of Funds
6 Improvements Projects 5,824,000 5,922,700 4,300,800
7 Infrastructure Reserve 3,844,550 (761,600) (734,950)
8 Total Uses $ 9,668,550 $ 5,161,100 $ 3,565,850
9 Net Annual Cash Balance (1,768,550) 38,900 1,434,150
10 Beginning Unrestricted Fund Balance 1,775,000 6,450 45,350 11 Net Cumulative Fund Balance $ 6,450 $ 45,350 $ 1,479,500 12 Construction + Infrastructure Reserves $ 5,879,800 $ 5,157,100 $ 5,856,300 13 Minimum Reserves $ 5,873,350 $ 5,111,750 $ 4,376,800 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-8
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 and reserves over the Study period. Table 2-9, Lines 18 to 21 for the Water Utility and Table 2-10, Lines 13 to 15 for Recycled Water Utility summarize these associated amounts, respectively. The other funds consist of the Operating Reserve, Rate Stabilization Reserve, and Construction Fund. See Section 2.7 for further explanation on Rate Stabilization Reserve. 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 three reserves:
 Operating Reserve represents working capital maintained by the Operating Fund to cover day-to-day expenses and maintain enough funds to cover accounts receivable 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 the average of the following two-years planned CIP.
 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 Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
Source of Funds
1 Intra Transfer In - Debt Financing 0 0 0
2 Intra Transfer In - Customer Service Charge 50,000 50,000 50,000 3 Connection Charges 0 0 0
4 Developer Contributions 0 0 0
5 Total Sources $ 50,000 $ 50,000 $ 50,000
Use of Funds
6 Improvements Projects 51,800 53,600 55,500
7 Infrastructure Reserve 1,200 1,850 1,950
8 Total Uses $ 53,000 $ 55,450 $ 57,450
9 Net Annual Cash Balance (3,000) (5,450) (7,450)
10 Beginning Unrestricted Fund Balance 379,900 376,900 371,450 11 Net Cumulative Fund Balance $ 376,900 $ 371,450 $ 364,000 12 Construction + Infrastructure Reserves $ 429,600 $ 426,000 $ 420,500 13 Minimum Reserves $ 52,700 $ 54,550 $ 56,500
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-9
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.

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)
Water Utility - Operating Fund
V, $100.0
C
0 $80.0
·-
2: $60.0
$40.0
$20.0
$0.0
-$20.0
-$40.0
2027 2028 2029
- O&M - Debt Service - Capital Projects - Rate Stabilization ...,_Revenue Cash Ba lance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-10
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.  Increase combined construction and infrastructure reserve to the average of the next two years CIP.  Continue transfers for the rate stabilization reserve to meet the goal of 10% of rate revenues.

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 be calculated at less than that stated amount.  Line 6 is the total revenue generated from user charges.  Line 14 for the Water Utility and Line 9 for the Recycled Water Utility represent other operating revenues.  Line 15 for the Water Utility and Line 10 for the Recycled Water Utility represent total revenues for the enterprises.

Revenue Requirements
Recycled Water Program - Operating Fund
V, $20.0
C
0 $15 .0
~
$10.0
$5.0
$0.0
-$5.0
-$10.0
- O&M - Debt Service - capital Projects - Rate Stabilization - Revenue Cash Ba lance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-11
 Line 17 for the Water Utility and Line 12 for the Recycled Water Utility represent O&M expenses. The O&M expenses include water production and water purchase.  Line 22 for the Water Utility and Line 16 for the Recycled Water Utility represent transfers. The transfers include money to the Rate Stabilization Fund, Operating Reserve, and Construction Fund.  Line 23 for the Water Utility and Line 17 for the Recycled Water Utility represent total revenue requirements for the enterprises.

Line 27 for the Water Utility and Line 21 for the Recycled Water Utility represent the net cumulative cash balance (unrestricted) within the Operating Funds. The net unrestricted plus operating reserve intends to match, to the extent possible, Line 28 for the Water Utility and Line 29 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 in critical equipment or supplies, or an abrupt drop in accounts receivable. The reserve target minimum is 90 days of O&M expenses.
(Section left intentionally blank)
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-12
Table 2-9 Operating Fund (Water)
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 75,546,100 77,313,000 79,124,200 Year Months Effective Rate Adj
2 FY 2027 12 13.00% 9,821,000 10,050,700 10,286,100
3 FY 2028 12 3.00% 2,620,900 2,682,300
4 FY 2029 12 3.00% 2,762,800
5 Increased Revenue Due to Adjustments 9,821,000 12,671,600 15,731,200 6 Subtotal Rate Revenue $ 85,367,100 $ 89,984,600 $ 94,855,400 Other Operating Revenue
7 Solar System Maintenance 89,800 89,800 89,800
8 Water System Maintenance 1,669,700 1,669,700 1,669,700 9 Water Construction 0 0 0
10 Water System Operations 0 0 0
11 Administration Design 1,557,400 1,566,600 1,576,000
12 Water Quality 0 0 0
13 Water Resources 0 0 0
14 Subtotal Other Operating Revenue $ 3,316,900 $ 3,326,100 $ 3,335,500 15 Total Revenue $ 88,684,000 $ 93,310,700 $ 98,190,900 Revenue Requirements
Operating & Maintenance
16 O&M Expenses 75,216,700 81,010,800 87,669,900
17 Subtotal O&M $ 75,216,700 $ 81,010,800 $ 87,669,900
Transfers
18 Transfer to Other Funds 346,500 154,500 292,400
19 Transfer to Rate Stabilization Reserve 600,000 725,000 725,000 20 Transfer to Operating Reserve 7,811,000 1,428,700 1,641,900 21 Transfer to Water Construction Fund 7,900,000 5,200,000 5,000,000 22 Total Transfers $ 16,657,500 $ 7,508,200 $ 7,659,300 23 Total Revenue Requirements $ 91,874,200 $ 88,519,000 $ 95,329,200 24 Net Annual Cash Balance (3,190,200) 4,791,700 2,861,700 25 Beginning Fund Balance 3,319,700 129,500 4,921,200
26 Net Cumulative Fund Balance $ 129,500 $ 4,921,200 $ 7,782,900 27 Unrestricted + Operating Reserve $ 18,676,100 $ 24,896,500 $ 29,400,100 28 Minimum Operating Reserves (90 Days) $ 18,546,600 $ 19,975,300 $ 21,617,200 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-13
Table 2-10 Operating Fund (Recycled Water)
Table 2-9 presents the proposed Water Utility Operating Fund, and Table 2-10 presents the Recycled Water Utility Operating Fund.

Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 9,524,600 9,619,900 9,716,000 Year Months Effective Rate Adj
2 FY 2027 12 14.00% 1,333,400 1,346,800 1,360,200
3 FY 2028 12 14.00% 1,535,300 1,550,700
4 FY 2029 12 13.00% 1,641,500
5 Increased Revenue Due to Adjustments 1,333,400 2,882,100 4,552,400 6 Subtotal Rate Revenue $ 10,858,000 $ 12,502,000 $ 14,268,400 Other Operating Revenue
7 System Maintenance 102,500 104,600 106,700
8 South Bay Water Recycling System Maintenance 1,162,400 1,204,900 1,248,800 9 Subtotal Other Operating Revenue $ 1,264,900 $ 1,309,500 $ 1,355,500 10 Total Revenue $ 12,122,900 $ 13,811,500 $ 15,623,900 Revenue Requirements
Operating & Maintenance
11 O&M Expenses 12,688,600 13,922,100 15,279,700
12 Subtotal O&M 12,688,600 13,922,100 15,279,700
Transfers
13 Transfer to Rate Stabilization Reserve 150,000 150,000 150,000 14 Transfer to Operating Reserve 328,700 304,100 334,800 15 Transfer to Recycled Water Const Fund 50,000 50,000 50,000 16 Total Transfers 528,700 504,100 534,800
17 Total Revenue Requirements $ 13,217,300 $ 14,426,200 $ 15,814,500 18 Net Annual Cash Balance (1,094,400) (614,700) (190,600) 19 Beginning Fund Balance 2,005,400 911,000 296,300
20 Net Cumulative Fund Balance $ 911,000 $ 296,300 $ 105,700 21 Unrestricted + Operating Reserve $ 4,039,700 $ 3,729,100 $ 3,873,300 22 Minimum Operating Reserves (90 Days) $ 3,128,700 $ 3,432,800 $ 3,767,600 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 2-14
Figure 2-4 Water Operating Cash Flow
Figure 2-5 Recycled Water Operating Cash Flow
Water Utility - Operating Fund
V, $120.0
C
0 $100.0
2:
$80.0
$60.0
$40.0
$20.0
$0.0
2027 2028
- O&M - Debt Service - capital Projects - Rate Stabilization - Revenue VI $18.0
§ $16.0
~ $14.0
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
Recycled Water Program - Operating Fund
2027 2028
- O&M - Debt Service - Capital Projects - Rate Stabilization ~ Revenue 2029
Cash Balance
2029
cash Balance
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-1

3.0Cost 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 2027 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 2027.

Table 3-1 Cost of Service Revenue from Rates (Water)
Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expenses 75,216,700 75,216,700 0
2 Debt Service 0 0 0
3 Transfers 8,757,500 7,900,000 16,657,500
4 Subtotal 83,974,200 7,900,000 91,874,200
Less Revenue Requirements Met from Other Sources
5 Solar System Maintenance 89,800 89,800 0
6 Water System Maintenance 1,669,700 1,669,700 0
7 Water Construction 0 0 0
8 Water System Operations 0 0 0
9 Administration Design 1,557,400 1,557,400 0
10 Water Quality 0 0 0
11 Water Resources 0 0 0
12 Subtotal 3,316,900 0 3,316,900
Adjustments
13 Adjustment for Annual Cash Balance 3,190,200 3,190,200 0 14 Subtotal 3,190,200 0 3,190,200
15 Cost of Service to be Recovered from Rates 77,467,100 $ $ 7,900,000 $ 85,367,100 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-2
Table 3-2 Cost of Service Revenue from Rates (Recycled Water) The total revenue requirement is shown in Line 4, which corresponds with Table 2-9, Line 23, and Table 2-10, Line

17. 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, Line 9, 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 $3.2M figure indicates that the forecast projects a negative cash balance for the year. In the case of the Recycled Water Utility, the $1.1M figure indicates that the forecast projects a negative 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 more than the average rate of use.  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.

Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expenses 12,688,600 0 12,688,600
2 Debt Service 0 0 0
3 Transfers 478,700 50,000 528,700
4 Subtotal 13,167,300 50,000 13,217,300
Less Revenue Requirements Met from Other Sources
5 System Maintenance 102,500 0 102,500
6 South Bay Water Recycling System Maintenance 1,162,400 1,162,400 0 7 Subtotal 1,264,900 0 1,264,900
Adjustments
8 Adjustment for Annual Cash Balance 1,094,400 1,094,400 0 9 Subtotal 1,094,400 0 1,094,400
10 Cost of Service to be Recovered from Rates 10,808,000 $ $ 10,858,000 50,000 $ Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-3
 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 for 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 system 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 more than 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 is assigned to 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.

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%
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-4

3.2.2 Allocation of Operating and Maintenance Expenses
In allocating O&M expenses for TY 2027, 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 14 and Table 3-2, Lines 7 and 9. 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)
Table 3-4 Allocation of O&M Expenditures (Recycled 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 129,900 0 0 129,900 0 0 0 0 1 1422 Water System Maintenance
2 Customer Service 522,600 0 0 0 522,600 0 0 0
3 Backflow Prevention 1,356,700 0 0 0 0 0 1,356,700 0
4 All Other 1,106,700 604,400 306,700 184,500 0 11,100 0 0 1423 Water Construction 4,684,000 2,558,400 1,298,100 780,700 0 46,800 0 0 5 1424 Water System Operations
6 Generation & Pumping 1,500,100 986,200 498,900 0 0 15,000 0 0 7 Customer Billing & Meter Reading 984,500 0 0 0 984,500 0 0 0 8 Meters 463,400 0 0 463,400 0 0 0 0
Hydrants 1,750,100 0 0 0 0 1,750,100 0 0
9 All Other 8,766,500 4,788,200 2,429,500 1,461,100 0 87,700 0 0 10 1411 Administration Design 4,847,100 3,355,400 312,200 167,100 649,700 103,800 165,400 93,500 11 1412 Water Quality 695,400 563,200 0 125,200 0 7,000 0 0 12 1413 Water Resources
Water Purchase 47,761,700 38,687,000 0 8,597,100 0 477,600 0 0 13 All Other 648,000 524,900 0 116,600 0 6,500 0 0
14 Transfers 8,757,500 6,062,200 564,200 302,000 1,173,800 187,600 298,900 168,800 15 Total O&M Expenses $ 83,974,200 $ 58,129,900 $ 5,409,600 $ 2,895,400 $ 11,255,700 $ 1,798,500 $ 2,866,100 $ 1,619,000 Less Other Revenue
16 Miscellaneous Revenues 3,316,900 2,296,100 213,700 114,400 444,600 71,000 113,200 63,900 17 Other Adjustments 3,190,200 2,208,400 205,500 110,000 427,600 68,300 108,900 61,500 18 Net Operating Expenses $ 77,467,100 $ 53,625,400 $ 4,990,400 $ 2,671,000 $ 10,383,500 $ 1,659,200 $ 2,644,000 $ 1,493,600 Line No. Description Total Costs
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 10,468,600 10,468,600 0 0 0 0
3 Customer Billing & Meter Reading 5,600 0 0 0 5,600 0
4 Meters 727,800 0 0 727,800 0 0
5 All Other 331,700 139,300 97,600 94,800 0 0
6 1525 South Bay Water Recycling System 1,101,600 648,000 453,600 0 0 0 7 Transfers 478,700 426,400 20,900 3,600 27,600 200
8 Total O&M Expenses $ 13,114,000 $ 11,682,300 $ 572,100 $ 98,400 $ 755,400 $ 5,800 Less Other Revenue
9 Miscellaneous Revenues 1,264,900 1,126,700 55,200 9,500 72,900 600 10 Other Adjustments 1,094,400 975,000 47,700 8,200 63,000 500 11 Net Operating Expenses $ 10,754,700 $ 9,580,600 $ 469,200 $ 80,700 $ 619,500 $ 4,700 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-5

3.2.3 Allocation of Capital Investments
In allocating capital investment for TY 2027, 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 $64.5M shown on Line 11 for the Water Utility and $1.0M 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, 2025. This value represents the original cost (book value) of the assets.

Table 3-5 Allocation of Capital Costs (Water)
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.

Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($) ($)
Water Utility
Plant Assets
1 Water Production 18,082,700 14,647,000 0 3,254,900 0 180,800 0 0 2 Pumping 2,788,400 1,833,200 927,300 0 0 27,900 0 0
3 Treatment 1,699,900 1,117,600 565,300 0 0 17,000 0 0
4 Transmission & Distribution 33,388,400 18,236,800 9,253,000 5,564,700 0 333,900 0 0 5 Meters & Services 6,214,700 0 0 6,214,700 0 0 0 0
6 Fire Hydrants 684,900 0 0 0 0 684,900 0 0
7 General Plant 1,609,600 917,500 275,200 142,500 242,500 31,900 0 0 8 Total Plant Assets $ 64,468,600 $ 36,752,100 $ 11,020,800 $ 5,707,200 $ 9,712,100 $ 1,276,400 0 $ $ 0 Less Other Revenue
9 Miscellaneous Revenues 0 0 0 0 0 0 0 0
10 Other Adjustments 0 0 0 0 0 0 0 0
11 Net Capital Expenses $ 64,468,600 $ 36,752,100 $ 11,020,800 $ 5,707,200 $ 9,712,100 $ 1,276,400 0 $ $ 0 Line No. Description Total Costs
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 Transmission & Distribution 1,022,300 429,500 300,700 292,100 0 0 5 Meters 0 0 0 0 0 0
6 Total Plant Assets $ 1,022,300 $ 429,500 $ 300,700 $ 292,100 $ 0 $ 0 Less Other Revenue
7 Miscellaneous Revenues 0 0 0 0 0 0
8 Other Adjustments 0 0 0 0 0 0
9 Net Capital Expenses $ 1,022,300 $ 429,500 $ 300,700 $ 292,100 $ 0 $ 0 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-6
Table 3-7 summarizes the estimated TY 2027 units of service for 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 more than 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 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’s 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.

3.4.1 Units Costs of Service
The TY 2027 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 TY 2027. 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 different 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
Unit Cost (Table 3-8, Line 6) $ per HCF 8.13
General Customer Consumption (Table 3-9, Line 1) 7,148,088 HCF Total Allocated Cost $ 58,129,000
Please note that the numbers within the tables are rounded, yet the calculations are done based on non-rounded values; therefore, results might vary.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-1
Table 3-7 Units of Service (Water and Recycled Water)
Table 3-8 Units Cost of Service (Water)
Consumption Maximum Day Maximum Day Fire Cross
Annual Avg. Day Factor Total Extra Factor Total Extra Meters Cust/Bills Protection Connection Column 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 7,148,088 19,584 166% 32,509 12,925 249% 48,764 16,255 46,815 323,423 0 0 2 Subtotal 7,148,088 19,584 32,509 12,925 48,764 16,255 46,815 323,423 Fire Service
3 Public Fire 0 0 552 552 4,417 3,865 0 0 3,437 0
4 Private Fire 0 0 290 290 2,321 2,030 0 15,669 1,805 0 5 Subtotal 0 0 842 842 6,738 5,896 0 15,669 5,242 0
Cross Connection
6 Cross Connection 37,490 0 9,115
7 Subtotal 0 0 0 0 0 0 0 37,490 0 9,115
8 Total Water System 7,148,088 19,584 33,351 13,768 55,502 22,150 46,815 376,582 5,242 9,115 Recycled Water Utility
9 General Customer 1,775,791 4,865 130% 6,325 1,460 195% 9,487 3,162 2,563 3,503 0 0 10 Subtotal 1,775,791 4,865 6,325 1,460 9,487 3,162 2,563 3,503 0 0 Line No. Description Common to All Customers
Base Extra Capacity Customer Fire Cross
Base Max. Day Max. Hour Meters Cust/Bill. Protection Connection ($) ($) ($) ($) ($) ($) ($)
Water Utility
1 Net Operating Expense 77,467,100 53,625,400 4,990,400 2,671,000 10,383,500 1,659,200 2,644,000 1,493,600 2 Debt Service 0 0 0 0 0 0 0 0
3 Capital Costs 7,900,000 4,503,600 1,350,500 699,400 1,190,100 0 156,400 0 4 Total Cost of Service $ 85,367,100 $ 58,129,000 $ 6,340,900 $ 3,370,400 $ 11,573,600 $ 1,659,200 $ 2,800,400 $ 1,493,600 5 Units of Service (Total) 7,148,088 13,768 22,150 46,815 376,582 5,242 9,115 HCF HCF/Day HCF/Day Eq. Meters Bills Eq. Hydrants Eq. Meters 6 Cost per Unit $ 8.13 $ 460.57 $ 152.16 $ 247.22 $ 4.41 $ 534.18 $ 163.87 per HCF per HCF/Day per HCF/Day per Eq. Meter per Bill per Eq. Hydrant per Eq. Meter Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-2
Table 3-9 Distribution of Costs to Customer Classes (Water) 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 7,148,088 12,925 16,255 46,815 323,423 0 0
2 Allocation of costs of service 79,553,900 58,129,000 5,953,000 2,473,300 11,573,600 1,425,000 0 0 Public Fire
3 Units 0 552 3,865 0 3,437 0 0
4 Allocation of costs of service 2,678,400 254,300 0 588,100 0 1,836,000 0 0 Private Fire
5 Units 0 290 2,030 15,669 0 1,805 0
6 Allocation of costs of service 1,476,000 133,600 0 309,000 69,000 0 964,400 0 Cross Connection
7 Units 0 0 0 37,490 0 9,115 0
8 Allocation of costs of service 1,658,800 0 0 0 165,200 0 1,493,600 0 7 TOTAL COSTS OF SERVICE $ 85,367,100 $ 58,129,000 $ 6,340,900 $ 3,370,400 $ 11,573,600 $ 1,659,200 $ 2,800,400 $ 1,493,600 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 3-3
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
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
1 Net Operating Expense 10,808,000 9,633,900 469,200 80,700 619,500 4,700 2 Debt Service 0 0 0 0 0 0
3 Capital Costs 50,000 21,000 14,700 14,300 0 0
4 Total Cost of Service $ 10,858,000 $ 9,654,900 $ 483,900 $ 95,000 $ 619,500 $ 4,700 5 Units of Service (Total) 1,775,791 1,460 3,162 2,563 3,503 HCF HCF/Day HCF/Day Eq. Meters Bills
6 Cost per Unit $ 5.44 $ 331.54 $ 30.04 $ 241.67 $ 1.34 per HCF per HCF/Day per HCF/Day per Eq. Meter per Bill
Line No. Description Total Costs
Common to All Customers
Base Extra Capacity Customer
Base Max. Day Max. Hour Meters Cust/Bill.
($) ($) ($) ($) ($) ($)
Recycled Water Utility
General Customer
1 Units 1,775,791 1,460 3,162 2,563 3,503
2 Allocation of costs of service 10,858,000 9,654,900 483,900 95,000 619,500 4,700 3 TOTAL COSTS OF SERVICE $ 10,858,000 $ 9,654,900 $ 483,900 $ 95,000 $ 619,500 $ 4,700 Line No. Description Total Costs
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-1

4.0Rate 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 with 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 2026.

Table 4-2 shows the Water Utility three-year fixed service charge rate schedule.

Table 4-1 Costs within the Minimum Monthly Service Charge for FY 2027 (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 $ per Bill $ $/Month
5/8" x 3/4" 20.60 4.77 1.00 25.37 4.41 1.00 4.41 29.78
1" 20.60 4.77 1.67 42.28 4.41 1.00 4.41 46.69
1-1/2" 20.60 4.77 3.33 84.56 4.41 1.00 4.41 88.97
2" 20.60 4.77 5.33 135.30 4.41 1.00 4.41 139.71
3" 20.60 4.77 10.67 270.61 4.41 1.00 4.41 275.01
4" 20.60 4.77 16.67 422.82 4.41 1.00 4.41 427.23
6" 20.60 4.77 33.33 845.64 4.41 1.00 4.41 850.05
8" 20.60 4.77 53.33 1,353.03 4.41 1.00 4.41 1,357.44
10" 20.60 4.77 80.00 2,029.55 4.41 1.00 4.41 2,033.95
12" 20.60 4.77 112.50 2,854.05 4.41 1.00 4.41 2,858.45
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-2
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 2026. Table 4-5 shows the Recycled Water Utility three-year fixed service charge rate schedule.

Table 4-3 Costs within the Minimum Monthly Service Charge for FY 2027 (Recycled Water) Table 4-4 Proposed Minimum Monthly Service Charge (Recycled Water) Proposed
Customer Class FY 2027 FY 2028 FY 2029
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 29.78 30.12 31.50
1" 46.69 47.16 49.47
1-1/2" 88.97 89.76 94.40
2" 139.71 140.88 148.32
3" 275.01 277.19 292.10
4" 427.23 430.55 453.85
6" 850.05 856.53 903.16
8" 1,357.44 1,367.72 1,442.34
10" 2,033.95 2,049.30 2,161.24
12" 2,858.45 2,879.97 3,037.39
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 $ per Bill $ $/Month
5/8" x 3/4" 20.14 1.00 20.14 1.34 1.00 1.34 21.48
1" 20.14 1.67 33.57 1.34 1.00 1.34 34.91
1-1/2" 20.14 3.33 67.13 1.34 1.00 1.34 68.47
2" 20.14 5.33 107.41 1.34 1.00 1.34 108.75
3" 20.14 10.67 214.82 1.34 1.00 1.34 216.16
4" 20.14 16.67 335.66 1.34 1.00 1.34 337.00
6" 20.14 33.33 671.31 1.34 1.00 1.34 672.65
8" 20.14 53.33 1,074.10 1.34 1.00 1.34 1,075.44
10" 20.14 80.00 1,611.15 1.34 1.00 1.34 1,612.49
12" 20.14 112.50 2,265.68 1.34 1.00 1.34 2,267.02
Proposed
Customer Class FY 2027 FY 2028 FY 2029
Minimum Monthly Meter Rates ($/Month) $/month $/month $/month 5/8" x 3/4" 21.48 24.54 27.76
1" 34.91 39.94 45.26
1-1/2" 68.47 78.45 89.01
2" 108.75 124.65 141.52
3" 216.16 247.86 281.52
4" 337.00 386.47 439.02
6" 672.65 771.50 876.54
8" 1,075.44 1,233.53 1,401.55
10" 1,612.49 1,849.58 2,101.57
12" 2,267.02 2,600.38 2,954.72
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-3

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 1,287 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 2027 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 3,037 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 crossconnection 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 2027 Private Fire Protection Total
Meter Unit Meter Adjusted Service
Size Cost Ratio Unit Cost Charge
per EH $/Month
2" 68.13 0.06 4.09 4.09
4" 68.13 0.34 23.16 23.16
6" 68.13 1.00 68.13 68.13
8" 68.13 2.13 145.11 145.11
10" 68.13 3.83 260.92 260.92
12" 68.13 6.19 421.70 421.70
Proposed
Customer Class FY 2027 FY 2028 FY 2029
Fire Service ($/Month) $/month $/month $/month
2" 4.09 4.15 4.20
4" 23.16 23.50 23.79
6" 68.13 69.13 69.98
8" 145.11 147.24 149.06
10" 260.92 264.75 268.03
12" 421.70 427.89 433.19
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-4
Table 4-8 Proposed Cross Connection Charge

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 Typical Monthly Costs under Proposed Charges
Table 4-10 and Table 4-11 compare typical monthly costs under existing rates and the proposed schedule of water and recycled water user rates derived in this study.

Cross Connection Total
Meter Unit Meter Adjusted Service
Size Cost Ratio Unit Cost Charge
per EM $/Month
1" 15.17 0.63 9.48 9.48
2" 15.17 1.00 15.17 15.17
3" 15.17 2.00 30.33 30.33
4" 15.17 3.13 47.39 47.39
6" 15.17 6.25 94.79 94.79
8" 15.17 10.00 151.66 151.66
10" 15.17 15.00 227.49 227.49
Proposed
Customer Class FY 2027 FY 2028 FY 2029
Cross Connection ($/Month) $/month $/month $/month
1" 9.48 9.88 9.89
2" 15.17 15.81 15.82
3" 30.33 31.61 31.64
4" 47.39 49.40 49.44
6" 94.79 98.79 98.89
8" 151.66 158.07 158.22
10" 227.49 237.10 237.33
Proposed
Customer Class FY 2027 FY 2028 FY 2029
$/HCF $/HCF $/HCF
Consumption Charges ($/HCF)
Water Utility
General Customer 11.09 11.43 11.78
Recycled Water Utility
General Customers 6.05 6.90 7.79
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-5
Table 4-10 Typical Monthly Bill (Water)
Table 4-11 Typical Monthly Bill (Recycled Water)

4.4 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 2026.

Typical FY 2026 FY 2027
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Water Utility
General Customer $26.46 $29.78 0
$26.46 $29.78 3
$49.45 $55.46 5
$98.90 $110.93 10
$118.68 $133.11 12
$197.80 $221.86 20
$296.70 $332.79 30
$395.60 $443.71 40
$494.50 $554.64 50
Typical FY 2026 FY 2027
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Recycled Water Utility
General Customer $17.80 $21.48 0
$17.80 $21.48 3
$27.15 $30.25 5
$54.30 $60.50 10
$65.16 $72.60 12
$108.60 $121.00 20
$162.90 $181.50 30
$217.20 $241.99 40
$271.50 $302.49 50
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 4-6
Figure 4-1 Comparison to Neighboring Water Utilities
$300.00
Water Rate Sewer Rate Combined
$250.00
$200.00
$150.00
I. 11
$100.00
II 1. 11 $50.00
$0.00 I I
Mountain View San Jose (Muni)
Santa
Sunnyvale SJWC Milpitas Palo Alto Clara
Water Rate $98.57 $136.75 $151.90 $133.08 $147.48 $148.36 $178.60 (12 HCF) Sewer Rate $77.79 $61.50 $51.73 $64.46 $51.73 $69.46 $77.84 Combined $176.36 $1 86.76 $196.15 $197.54 $199.21 $208.90 $256.44 *All rates are proposed for FY26-27
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Sewer Utility 5-1
Sewer Utility

5.0Revenue 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 residential and multi-family residential.  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 (catchall 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 following:1
● 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 26,710 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 0.3% annually over the Study period. An EDU represents a single-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

1 City Website, Schedule S-16 Monthly Sewer Service Charges, <http://www.santaclaraca.gov/government/departments/water-sewerutilities/water-sewer-and-recycled-water-rates/sewer-rates> City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-2

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 is expected to increase 2.5% 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

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. In conjunction with water consumption, contributed sewage flow has fluctuated based on drought conditions in the state. In addition, the City’s Water Shortage Contingency Plan remains in effect, and customers have made conservation a way of life. Therefore, the City projects that sewage flow will increase 2.5% annually over the Study period.

Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
(EDUs) (EDUs) (EDUs)
1 Single Family 261,597 262,251 262,907
2 Multi Family 351,961 352,841 353,723
3 Total 613,558 615,092 616,630
Line No. Description
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
(Bills) (Bills) (Bills)
1 Amusement Parks 112 115 118
2 Auto Dealers & Service Station 415 425 436
3 Churches 301 309 317
4 Commercial/Industrial/Miscellaneous 11,127 11,405 11,690 5 Electric & Electronic Equip. 500 513 526
6 Food and Kindred Products 40 41 42
7 Hospitals & Convalescent Homes 364 373 382
8 Industrial Chemical 42 43 44
9 Laundries 157 161 165
10 Machinery Manufacturers 803 823 844
11 Metal Plating 100 103 106
12 Motels & Hotels 67 69 71
13 Repair Shops & Car Washes 486 498 510
14 Restaurants 279 286 293
15 Schools & Colleges 591 606 621
16 Total 15,384 15,770 16,165
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-3
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. In 2023, the City’s last major user customer left the City, therefore there are no major users for the duration of the Study period.

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 5-4 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 2027 FY 2028 FY 2029
(HCF) (HCF) (HCF)
1 Amusement Parks 83,071 85,148 87,277
2 Auto Dealers & Service Station 37,838 38,784 39,754
3 Churches 12,214 12,519 12,832
4 Commercial/Industrial/Miscellaneous 1,615,113 1,655,491 1,696,878 5 Electric & Electronic Equip. 455,270 466,652 478,318
6 Food and Kindred Products 19,156 19,635 20,126
7 Hospitals & Convalescent Homes 95,849 98,245 100,701
8 Industrial Chemical 80,453 82,464 84,526
9 Laundries 23,935 24,533 25,146
10 Machinery Manufacturers 36,753 37,672 38,614
11 Metal Plating 5,706 5,849 5,995
12 Motels & Hotels 99,700 102,193 104,748
13 Repair Shops & Car Washes 17,044 17,470 17,907
14 Restaurants 69,773 71,517 73,305
15 Schools & Colleges 45,191 46,321 47,479
16 Total (HCF) 2,697,066 2,764,493 2,833,606
17 Total (AF) 6,192 6,346 6,505
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-4
Table 5-4 Existing Sewer Rates
Table 5-5 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 $54.5M in FY 2027 to $55.7M in FY 2029.
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Existing Existing
FY 2026 FY 2026
Residential ($/EDU) Major Commercial and Industrial Users Single Family Annual Capital Cost Recovery 57.56
Multi-Family Volume (per MGD) 53.15 1,147,617
BOD [2] (per 1,000 lbs/day) 85,145
Non-Residential* ($/HCF) SS [3] (per 1,000 lbs/day) 77,042 Amusement Parks 7.22 NH3 [4] (per 1,000 lbs/day) 466,740 Auto Dealers & Service Station 8.38
Churches 6.12 Operating and Maintenance Cost Recovery
Com/Ind/Misc 6.85 Volume (per MG) 3,315.00
Electric & Electronic Equip. 6.33 BOD [2] (per 1,000 lbs) 502.00 Food and Kindred Products SS [3] (per 1,000 lbs) 17.53 625.00 Hospitals & Convalescent Homes 8.00 NH3 [4] (per 1,000 lbs) 5,125.00 Industrial Chemical 12.69
Laundries 7.01
Machinery Manufacturers 9.98
Metal Plating 4.92
Motels & Hotels 8.56
Repair Shops & Car Washes 6.47
Restaurants 17.88
Schools & Colleges 7.31
*In no case shall the minimum charge be less than $57.56 per month.

Description Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-5
Table 5-5 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 an average of 1.9% 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 5-6 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 4.2% annually from FY 2027.

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 2.0% annually over the Study period.

Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
1 Single Family 15,078,200 15,115,900 15,153,700
2 Multi-Family 18,535,400 18,581,800 18,628,200
3 Amusement Parks 600,700 615,700 631,100
4 Auto Dealers & Service Station 337,900 346,200 355,000 5 Churches 91,300 93,500 95,900
6 Com/Ind/Misc 11,596,600 11,886,400 12,183,600
7 Electric & Electronic Equip. 2,883,900 2,956,100 3,030,000 8 Food and Kindred Products 335,000 343,300 352,000
9 Hospitals & Convalescent Homes 780,600 800,000 820,000 10 Industrial Chemical 1,014,000 1,039,400 1,065,300
11 Laundries 175,200 179,600 184,100
12 Machinery Manufacturers 409,200 419,400 429,900
13 Metal Plating 33,500 34,400 35,200
14 Motels & Hotels 849,400 870,600 892,400
15 Repair Shops & Car Washes 137,000 140,400 143,900
16 Restaurants 1,252,000 1,283,300 1,315,400
17 Schools & Colleges 378,900 388,500 398,100
18 Major Users - Customer 1 0 0 0
19 Total $ 54,488,800 $ 55,094,500 $ 55,713,800
Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-6
Table 5-6 O&M Expenses
As shown in Table 5-6, the Sewer Utility’s O&M expenses increase from $44.2M in FY 2027 to $46.5M in FY 2029.

5.5 Debt Service Requirements
Table 5-7 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 5-7 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 5-9Table 5-8 summarizes the Sewer Utility’s CIP for FY 2027 through FY 2029. The Sewer Utility is projecting $86.0M 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.

Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
1 Salaries 3,643,300 3,861,800 4,004,800
2 Benefits 2,312,000 2,346,200 2,446,400
3 Materials/Services/Supplies 781,321 797,666 814,330
4 Interfund Services 6,666,300 6,960,900 7,275,500
5 Resource & Production 30,763,700 31,379,000 32,006,600 6 Capital Outlay 0 0 0
7 Total $ 44,166,621 $ 45,345,566 $ 46,547,630
Line No. Description
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
1 Existing Short and Long-Term Loan 3,298,300 3,297,800 3,300,300 2 Proposed Short-Term and Rev Bonds 1,203,200 1,203,200 2,173,500 3 Total $ 4,501,500 $ 4,501,000 $ 5,473,800
Line No. Description
I
---
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-7
Table 5-8 Capital Improvement Projects

5.6.1 Capital Improvement Financing Plan
The City funds annual expenditure 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 5-9, the average annual CIP expenditure is $28.7M for the Sewer Utility. The planned average annual CIP contribution from the Sewer Utility Operating Fund is $15.5M annually over the Study period.

Table 5-9 Construction Fund Financing Plan
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
($) ($) ($)
1 1908 SJ-SC Regional Wastewater Facility 21,861,800 23,438,500 18,272,500 2 1909 Sanitary Sewer Capacity
Improvements 5,176,800 2,358,300 1,664,800
3 1911 Sanitary Sewer System Condition
Assessment 1,035,400 1,072,000 1,109,900
4 1912 Sanitary Sewer System Improvements 2,070,700 2,143,900 2,219,800 5 1919 Sanitary Sewer Hydraulic Modeling As
Needed Support 409,300 426,100 221,600
6 PW Paving Project Support 310,600 321,600 333,000
7 Total $ 31,358,700 $ 30,290,100 $ 24,390,900
Line No. Description
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
Source of Funds
1 Sanitary Outlet Charge 0 0 0
2 Sewer Conveyance Fee 0 0 0
3 Intra Transfer In - Debt Financing 15,500,000 12,500,000 0 4 Intra Transfer In - Customer Service Charge 15,500,000 15,500,000 15,500,000 5 Refund from San Jose/Cupertino 0 0 0
6 Total Sources $ 31,000,000 $ 15,500,000 $ 28,000,000
Use of Funds
7 Improvements Projects 26,181,900 27,931,800 22,726,100 8 Infrastructure Reserve (882,300) 66,750 10,600
9 Total Uses $ 25,299,600 $ 27,998,550 $ 22,736,700
10 Net Annual Cash Balance 5,700,400 (12,498,550) 5,263,300 11 Beginning Unrestricted Fund Balance 11,716,032 17,416,432 4,917,882 12 Net Cumulative Fund Balance $ 17,416,432 $ 4,917,882 $ 10,181,182 13 Construction + Infrastructure Reserves 21,823,132 $ $ 9,391,332 $ 14,665,232 14 Minimum Reserves $ 4,406,700 $ 4,473,450 $ 4,484,050 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-8

5.7 Transfers
The Sewer Utility will perform transfers over the Study period from the Operating Fund and other funds and reserves. The other funds consist of the Operating Reserve, Rate Stabilization Reserve, Pension Stabilization Reserve and Construction Fund. See Section 5.8 for further explanation on Rate Stabilization Reserve. 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-theline” cash flow items and not included as O&M expenses. Table 5-10, Lines 19 to 23 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 receivable 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 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.

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 expenditure, 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.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-9
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 Figure 5-1. 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.
 Maintain an operating reserve of 90 days of operating expenses.  Maintain construction and infrastructure reserve to the average of the next two years CIP for City and RWF projects.
 Continue to fund the rate stabilization reserve to reach its goal of 10% of rate revenues.  Continue to transfer into the pension stabilization reserve to meet the target goal.

Shown in Table 5-10 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 be calculated 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 enterprise.

Revenue Requirements
Sewer Utility - Operating Fund
V'l $80.0
C
0 $60.0
~
$40.0
$20.0
$0.0
-$20.0
-$40.0
2027 2028 2029
- O&M - Debt Service - Capital Projects - Rate Stabilization ..,._Revenue Cash Ba lance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-10
 Line 15 represents O&M expenses. The O&M expenses include RWF costs.  Line 18 represents debt service payments.
 Line 24 represents transfers. The transfers include money to the reserves and other funds.  Line 25 represents total revenue requirements.

Line 28 represents the net cumulative cash balance (unrestricted) within the Operating Fund. The net unrestricted cash balance plus the operating reserve intends to match, to the extent possible, Line 30. The cash balance reserve is required to ensure the Operation Fund can continue in the event of 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 31 represents debt service coverage. The operating cash flow is set up to achieve a debt service coverage of 1.25x requirement in all years. 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.
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City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-11
Table 5-10 Operating Fund (Sewer)
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029
Revenue
Rate Revenue
1 Revenue from Existing Rates 54,488,800 55,094,500 55,713,800 Year
Months
Effective Rate Adj
2 2027 12 8.75% 4,767,800 4,820,800 4,875,000
3 2028 12 11.00% 6,590,700 6,664,800
4 2029 12 9.00% 6,052,800
5 Increased Revenue Due to Adjustments 4,767,800 11,411,500 17,592,600 6 Subtotal Rate Revenue $ 59,256,600 $ 66,506,000 $ 73,306,400 Other Operating Revenue
7 System Administration (Interest Income) 663,600 676,000 688,600 8 System Maintenance 20,400 20,400 20,400
9 Operations 560,000 560,000 560,000
10 SJ SC Water Pollution Control Plant 0 0 0
11 Storm Pump Maintenance 0 0 0
12 Subtotal Other Operating Revenue $ 1,244,000 $ 1,256,400 $ 1,269,000 13 Total Revenue $ 60,500,600 $ 67,762,400 $ 74,575,400 Revenue Requirements
Operating & Maintenance
14 O&M Expenses 44,166,600 45,345,600 46,547,600
15 Subtotal O&M $ 44,166,600 $ 45,345,600 $ 46,547,600
Debt Service
16 Existing Loans/Bonds 3,298,300 3,297,800 3,300,300
17 Proposed Loans/Bonds 1,203,200 1,203,200 2,173,500
18 Total Debt Service $ 4,501,500 $ 4,501,000 $ 5,473,800 Transfers
19 Transfer to Other Fund 6,900 47,100 47,100
20 Transfer to Rate Stabilization Reserve 600,000 600,000 600,000 21 Transfer to Pension Stabilization Reserve 0 0 0
22 Transfer to Operating Reserve (5,457,900) 290,700 296,400 23 Transfer to Sewer Construction Fund 15,500,000 15,500,000 15,500,000 24 Total Transfers $ 10,649,000 $ 18,180,100 $ 16,443,500 25 Total Revenue Requirements $ 59,317,100 $ 68,026,700 $ 68,464,900 26 Net Annual Cash Balance 1,183,500 (264,300) 6,110,500 27 Beginning Fund Balance 4,622,368 5,805,868 5,541,568 28 Net Cumulative Fund Balance $ 5,805,868 $ 5,541,568 $ 11,652,068 29 Unrestricted + Operating Reserve $ 16,696,268 $ 16,722,668 $ 23,129,568 30 Minimum Operating Reserves (90 Days) 10,890,400 $ $ 11,181,100 $ 11,477,500 31 Debt Service Coverage (Min 1.25) 3.63 4.98 5.12
Line No. Description
---
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Revenue and Revenue Requirements 5-12
Figure 5-2 presents the proposed Operating Fund.

Figure 5-2 Sewer Operating Cash Flow
Sewer Utility - Operating Fund
V, $80.0
C
0 $70.0
~ $60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
2027 2028 2029
- O&M - Debt Service - Capital Projects - Rate Stabilization - Revenue cash Balance City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-1

6.0Cost of Service Analysis
The cost-of-service analysis requires that the utility recovers 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 2027 as the Test Year requirements to demonstrate the development of cost-ofservice sewer rates. Table 6-1 summarizes the total costs of service that need to be recovered from sewer user rates.

The table represents TY 2027.

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 5-10, Line 12. Shown in Line 4 is the total revenue requirement that corresponds with Table 5-10, Line 25. Line 11 represents the net annual cash balance during 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 $1.2M figure indicates that the forecast projects a positive 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, 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:

Operating Capital Total
Expense Cost Cost
($) ($) ($)
Revenue Requirements
1 O&M Expense 44,166,600 44,166,600 0
2 Debt Service Requirements 4,501,500 0 4,501,500
3 Transfers (4,851,000) 15,500,000 10,649,000
4 Subtotal $ 39,315,600 $ 20,001,500 $ 59,317,100
Less Revenue Requirements Met from Other Sources
5 System Administration 663,600 663,600 0
6 System Maintenance 20,400 20,400 0
7 Operations 560,000 560,000 0
8 SJ SC Water Pollution Control Plant 0 0 0
9 Storm Pump Maintenance 0 0 0
10 Subtotal $ 1,244,000 $ 1,244,000 0 $
Adjustments
11 Adjustment for Annual Cash Balance (1,183,500) (1,183,500) 0 12 Subtotal $ (1,183,500) $ (1,183,500) 0 $
13 Cost of Service to be Recovered from Rates 39,255,100 $ $ 20,001,500 $ 59,256,600 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-2
 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 2027, 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.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-3
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 deducted and normalized for partial rate adjustments as shown in Line 13 to determine the net O&M costs.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-4
Table 6-2 Allocation of O&M Expenditures

6.2.3 Allocation of Capital Investments
In allocating capital investment for TY 2027, 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 2027. The total net system investment of $42.8M 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, 2025. This value represents the original cost (book value) of the assets.

Table 6-3 Allocation of Capital Costs

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 Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
($) ($) ($) ($) ($) ($)
Operation & Maintenance
1 1511 System Administration 6,437,200 2,970,900 1,116,400 1,129,400 1,142,900 77,600 2 1512 System Maintenance 2,947,600 2,947,600 0 0 0 0
3 1514 Operations 2,417,900 2,417,900 0 0 0 0
4 1515 SJ SC Water Pollution Control Plant
5 Treatment 30,200,000 10,338,400 6,543,400 6,619,500 6,698,700 0 6 Customer Billing & Meter Reading 454,700 0 0 0 454,700 0 7 All Other 1,517,500 1,517,500 0 0 0 0
8 1516 Storm Pump Maintenance 191,700 191,700 0 0 0 0
9 Transfers 600,000 276,900 104,100 105,300 106,500 7,200 10 Total O&M Expenses $ 44,766,600 $ 20,660,900 $ 7,763,900 $ 7,854,200 $ 7,948,100 $ 539,500 Less Other Revenue
11 Miscellaneous Revenues 1,244,000 574,100 215,700 218,300 220,900 15,000 12 Other Adjustments (1,183,500) (546,200) (205,300) (207,600) (210,100) (14,300) 13 Net Operating Expenses $ 44,706,100 $ 20,633,000 $ 7,753,500 $ 7,843,500 $ 7,937,300 $ 538,800 Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
($) ($) ($) ($) ($) ($)
Plant Assets
1 Collection 38,077,700 38,077,700 0 0 0 0
2 Lift Station 4,235,500 4,235,500 0 0 0 0
3 General Plant 570,800 570,800 0 0 0 0
4 Total Plant Assets $ 42,884,000 $ 42,884,000 $ 0 $ 0 $ 0 $ 0 Less Other Revenue
5 Miscellaneous Revenues 0 0 0 0 0 0
6 Other Adjustments 0 0 0 0 0 0
7 Net Operating Expenses $ 42,884,000 $ 42,884,000 $ 0 $ 0 $ 0 $ 0 I ...... 1
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-5
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’s 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 2027 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.

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

Vol Component
Unit Cost (Table 6-5, Line 7) $ per HCF 4.27
Amusement Park Consumption (Table 6-6, Line 6) 83,071 HCF Total Allocated Cost $ 354,800
Please note that the numbers within the tables are rounded, yet the calculations are done based on non-rounded values; therefore, results might vary.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-1
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 Family 265,312 1,371,984 2,139,900 250 2,139,900 250 299,600 35 258,410 2 Multi-Family 351,973 1,708,782 2,665,200 250 2,665,200 250 373,100 35 29,033 3 Amusement Parks 112 83,071 130 67,400 41,500 80 11 5,700 273 4 Auto Dealers & Service Station 415 37,838 180 42,500 280 66,100 11 2,600 753 5 Churches 301 12,214 130 9,900 80 6,100 11 800 609
6 Com/Ind/Misc 11,127 1,615,113 1,309,900 130 806,100 80 110,800 11 21,961 7 Electric & Electronic Equip. 455,270 500 85,200 30 42,600 15 42,600 15 1,576 8 Food and Kindred Products 19,156 40 1,120 133,900 690 82,500 0 0 189 9 Hospitals & Convalescent Homes 364 95,849 137,500 230 50,800 85 15 9,000 838 10 Industrial Chemical 80,453 42 180,700 360 361,400 720 0 0 129 11 Laundries 157 23,935 150 22,400 110 16,400 5 700 365 12 Machinery Manufacturers 803 36,753 290 66,500 126,100 550 0 0 1,729 13 Metal Plating 100 5,706 10 400 60 2,100 1 0 202
14 Motels & Hotels 99,700 67 192,800 310 121 75,300 4,400 7 536 15 Repair Shops & Car Washes 486 17,044 180 19,100 280 29,800 0 0 675 16 Restaurants 279 69,773 1,250 544,100 243,800 560 10 4,400 2,084 17 Schools & Colleges 591 45,191 130 36,700 100 28,200 30 8,500 1,157 18 Major Users - Customer 1 0 0 0 0 0
19 Total 5,777,832 7,654,100 6,783,900 862,200 320,519
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-1
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 Operating Expense 39,255,100 15,182,000 7,753,500 7,843,500 7,937,300 538,800 2 Debt Service 3,298,300 1,129,100 714,600 723,000 731,600 0 3 Capital Costs (City) 4,694,100 4,694,100 0 0 0 0
4 Capital Costs (SJSC) 10,805,900 3,674,600 2,997,100 3,958,200 176,000 0 5 Total Cost of Service $ 58,053,400 $ 24,679,800 $ 11,465,200 $ 12,524,700 $ 8,844,900 $ 538,800 6 Units of Service 5,777,832 7,654,100 6,783,900 862,200 320,519 HCF lbs lbs lbs bills
7 Cost per Unit $ 4.27 $ 1.50 $ 1.85 $ 10.26 $ 1.68
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 $ 4.27 $ 1.50 $ 1.85 $ 10.26 $ 1.68
per HCF per lbs per lbs per lbs per bill
Single Family
2 Units 1,371,984 2,139,900 2,139,900 299,600 258,410
3 Allocation of costs of service 16,861,300 5,957,700 3,298,800 4,089,800 3,080,400 434,600 Multi-Family
4 Units 1,708,782 2,665,200 2,665,200 373,100 29,033
5 Allocation of costs of service 20,506,800 7,420,000 4,108,400 5,093,700 3,835,900 48,800 Amusement Parks
6 Units 83,071 67,400 41,500 5,700 273
7 Allocation of costs of service 603,000 360,700 103,900 79,300 58,600 500 Auto Dealers & Service Station
8 Units 37,838 42,500 66,100 2,600 753
9 Allocation of costs of service 384,100 164,300 65,500 126,300 26,700 1,300 Churches
10 Units 12,214 9,900 6,100 800 609
11 Allocation of costs of service 89,200 53,000 15,300 11,700 8,200 1,000 Com/Ind/Misc
12 Units 1,615,113 1,309,900 806,100 110,800 21,961
13 Allocation of costs of service 11,749,200 7,013,300 2,019,200 1,540,600 1,139,200 36,900 Electric & Electronic Equip.
14 Units 455,270 85,200 42,600 42,600 1,576
15 Allocation of costs of service 2,630,200 1,976,900 131,300 81,400 438,000 2,600 Food and Kindred Products
16 Units 19,156 133,900 82,500 0 189
17 Allocation of costs of service 447,600 83,200 206,400 157,700 0 300 Hospitals & Convalescent Homes
18 Units 95,849 137,500 50,800 9,000 838
19 Allocation of costs of service 819,200 416,200 212,000 97,100 92,500 1,400 City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Cost of Service Analysis 6-2
Table 6-6 Distribution of Costs to Customer Classes (Con’t) Line Total Common to All Customers
No. Description Cost Volume BOD TSS NH3 Customer
1 Cost per Unit $ 4.27 $ 1.50 $ 1.85 $ 10.26 $ 1.68
per HCF per lbs per lbs per lbs per bill
Industrial Chemical
20 Units 80,453 180,700 361,400 0 129
21 Allocation of costs of service 1,318,800 349,300 278,600 690,700 0 200 Laundries
22 Units 23,935 22,400 16,400 700 365
23 Allocation of costs of service 177,500 103,900 34,500 31,300 7,200 600 Machinery Manufacturers
24 Units 36,753 66,500 126,100 1,729 0
25 Allocation of costs of service 506,000 159,600 102,500 241,000 2,900 0 Metal Plating
26 Units 5,706 400 2,100 0 202
27 Allocation of costs of service 29,700 24,800 600 4,000 0 300 Motels & Hotels
28 Units 99,700 192,800 75,300 4,400 536
29 Allocation of costs of service 920,100 432,900 297,200 143,900 45,200 900 Repair Shops & Car Washes
30 Units 17,044 19,100 29,800 0 675
31 Allocation of costs of service 161,500 74,000 29,400 57,000 1,100 0 Restaurants
32 Units 69,773 544,100 243,800 4,400 2,084
33 Allocation of costs of service 1,656,400 303,000 838,700 466,000 45,200 3,500 Schools & Colleges
34 Units 45,191 36,700 28,200 8,500 1,157
35 Allocation of costs of service 396,000 196,200 56,600 53,900 87,400 1,900 36 TOTAL COSTS OF SERVICE $ 59,256,600 $ 25,089,000 $ 11,798,900 $ 12,965,400 $ 8,864,500 $ 538,800 -
- -------
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-1

7.0Rate 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.

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 schedule.

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 Line Proposed
No. Customer Class FY 2027 FY 2028 FY 2029
Monthly Service Charge ($/EDU) $/month $/month $/month
1 Single Family 64.46 70.97 78.36
2 Multi-Family 58.26 64.32 70.94
Minimum Commercial Bill Charge ($/Month) $/month $/month $/month 3 All Customers 64.46 70.97 78.36
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-2
schedule for the Sewer Utility. All customers that were classified as Paper are now under Commercial/Industrial/Misc.

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. The City does not have any major users left within the City; therefore, these rates will be for any future customer.

Line Proposed
No. Customer Class FY 2027 FY 2028 FY 2029
Commodity Charge ($/HCF) $/HCF $/HCF $/HCF
1 Amusement Parks 7.17 8.16 8.71
2 Auto Dealers & Service Station 9.45 10.39 11.09
3 Churches 5.71 6.62 6.98
4 Com/Ind/Misc 6.83 7.79 8.29
5 Electric & Electronic Equip. 5.71 6.69 7.11
6 Food and Kindred Products 23.23 24.22 26.19
7 Hospitals & Convalescent Homes 8.30 9.27 9.91
8 Industrial Chemical 16.36 17.39 18.72
9 Laundries 6.99 8.01 8.51
10 Machinery Manufacturers 12.36 13.25 14.20
11 Metal Plating 4.08 4.99 5.20
12 Motels & Hotels 9.19 10.18 10.90
13 Repair Shops & Car Washes 7.64 8.48 9.00
14 Restaurants 23.48 24.44 26.46
15 Schools & Colleges 7.92 8.79 9.41
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-3
Table 7-3 shows the three-year rate schedule based on unit costs in future years. The City does not have any major users left within the City; therefore, these rates will be for any future customer.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-4
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
Presented in
Line Proposed
No. Customer Class FY 2027 FY 2028 FY 2029
Major Commercial and Industrial Users
Operating and Maintenance Cost Recovery
1 Volume ($/MG) 3,637.30 5,232.79 5,529.11
2 BOD ($/1,000 lbs) 1,012.99 979.38 1,115.40
3 SS ($/1,000 lbs) 1,156.19 1,117.90 1,273.11
4 NH3 ($/1,000 lbs) 9,205.87 8,898.08 10,136.00
Annual Capital Cost Recovery
5 Volume ($/MGD) 836,642 751,626 780,139
6 BOD ($/1,000 lbs/day) 192,912 203,528 206,008
7 SS ($/1,000 lbs/day) 275,578 291,699 295,648
8 NH3 ($/1,000 lbs/day) 392,517 390,806 385,428
Typical FY 2026 FY 2027
Monthly Existing Proposed
Customer Class Usage Rates Rates
(HCF) ($) ($)
Residential $57.56 $64.46
Commercial $57.56 $64.46 0
$77.40 $81.16 10
$154.80 $162.31 20
$232.20 $243.47 30
$309.60 $324.63 40
$387.00 $405.78 50
$774.00 $811.57 100
$1,934.99 $2,028.92 250
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-5
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 medium cost sewer provider in the area. With the proposed rate increases, the City remains one of the medium sewer providers of the surveyed communities. All surveyed community rates are best estimates as of May 2026.

City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Rate Design 7-6
Figure 7-1 Comparison to Neighboring Sewer Utilities
$300.00
$250.00 Water Rate Sewer Rate Combined
$200.00
$150.00
I. I. 11
$100.00
II 1. 11 $50.00
$0.00 I
Sunnyvale Mountain View San Jose (Muni)
Santa
Clara SJWC Milpitas Palo Alto
Water Rate $98.57 $136.75 $151.90 $133.08 $147.48 $148.36 $178.60 (12HCF) Sewer Rate $77.79 $61.50 $51.73 $64.46 $51 .73 $69.46 $77.84 Combined $176.36 $186.76 $196.15 $197.54 $199.21 $208.90 $256.44 *All rates are proposed for FY26-27
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-1 Appendix A – Ten-Year Financial Plan
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-1 Water Utility
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 75,546,100 77,313,000 79,124,200 79,317,700 79,511,900 79,706,900 79,901,900 80,097,500 80,293,800 80,490,200 2 Increased Revenue Due to Adjustments 9,821,000 12,671,600 15,731,200 18,622,300 21,613,300 27,748,700 34,279,600 40,086,800 46,208,900 52,662,500 3 Subtotal Rate Revenue $ 85,367,100 $ 89,984,600 $ 94,855,400 $ 97,940,000 $ 101,125,200 $ 107,455,600 $ 114,181,500 $ 120,184,300 $ 126,502,700 $ 133,152,700 Other Operating Revenue
4 Solar System Maintenance 89,800 89,800 89,800 89,800 89,800 89,800 89,800 89,800 89,800 89,800 5 Water System Maintenance 1,669,700 1,669,700 1,669,700 1,669,700 1,669,700 1,669,700 1,669,700 1,669,700 1,669,700 1,669,700 6 Water Construction 0 0 0 0 0 0 0 0 0 0
7 Water System Operations 0 0 0 0 0 0 0 0 0 0
8 Administration Design 1,557,400 1,566,600 1,576,000 1,585,600 1,595,300 1,605,200 1,615,300 1,625,600 1,636,100 1,646,900 9 Water Quality 0 0 0 0 0 0 0 0 0 0
10 Water Resources 0 0 0 0 0 0 0 0 0 0
11 Subtotal Other Operating Revenue $ 3,316,900 $ 3,326,100 $ 3,335,500 $ 3,345,100 $ 3,354,800 $ 3,364,700 $ 3,374,800 $ 3,385,100 $ 3,395,600 $ 3,406,400 12 Total Revenue $ 88,684,000 $ 93,310,700 $ 98,190,900 $ 101,285,100 $ 104,480,000 $ 110,820,300 $ 117,556,300 $ 123,569,400 $ 129,898,300 $ 136,559,100 Revenue Requirements
Operating & Maintenance
13 O&M Expenses 75,216,700 81,010,800 87,669,900 93,987,400 99,255,200 104,837,400 110,696,700 116,990,700 123,484,900 130,430,100 14 Subtotal O&M $ 75,216,700 $ 81,010,800 $ 87,669,900 $ 93,987,400 $ 99,255,200 $ 104,837,400 $ 110,696,700 $ 116,990,700 $ 123,484,900 $ 130,430,100 Debt Service
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 Service $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Transfers
18 Transfer to Other Funds 346,500 154,500 292,400 154,200 154,200 154,200 154,200 154,200 154,200 154,200 19 Transfer to Rate Stabilization Reserve 600,000 725,000 725,000 725,000 725,000 550,000 500,000 500,000 500,000 500,000 21 Transfer to Operating Reserve 7,811,000 1,428,700 1,641,900 1,557,800 1,298,900 1,376,400 1,444,800 1,551,900 1,601,300 1,712,500 22 Transfer to Water Construction Fund 7,900,000 5,200,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 23 Total Transfers $ 16,657,500 $ 7,508,200 $ 7,659,300 $ 7,437,000 $ 7,178,100 $ 7,080,600 $ 7,099,000 $ 7,206,100 $ 7,255,500 $ 7,366,700 24 Total Revenue Requirements $ 91,874,200 $ 88,519,000 $ 95,329,200 $ 101,424,400 $ 106,433,300 $ 111,918,000 $ 117,795,700 $ 124,196,800 $ 130,740,400 $ 137,796,800 25 Net Annual Cash Balance (3,190,200) 4,791,700 2,861,700 (139,300) (1,953,300) (1,097,700) (239,400) (627,400) (842,100) (1,237,700) 26 Beginning Fund Balance 3,319,700 129,500 4,921,200 7,782,900 7,643,600 5,690,300 4,592,600 4,353,200 3,725,800 2,883,700 27 Net Cumulative Fund Balance $ 129,500 $ 4,921,200 $ 7,782,900 $ 7,643,600 $ 5,690,300 $ 4,592,600 $ 4,353,200 $ 3,725,800 $ 2,883,700 $ 1,646,000 28 Unrestricted + Operating Reserve $ 18,676,100 $ 24,896,500 $ 29,400,100 $ 30,818,600 $ 30,164,200 $ 30,442,900 $ 31,648,300 $ 32,572,800 $ 33,332,000 $ 33,806,800 29 Minimum Operating Reserves (90 Days) 18,546,600 $ $ 19,975,300 $ 21,617,200 $ 23,175,000 $ 24,473,900 $ 25,850,300 $ 27,295,100 $ 28,847,000 $ 30,448,300 $ 32,160,800 -Line No. Description .____.________,__________.________._ _ ___.__________.__________.___.______..______, City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-2 Recycled Water Utility
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
Revenue
Rate Revenue
1 Revenue from Existing Rates 9,524,600 9,619,900 9,716,000 9,813,300 9,911,400 10,010,500 10,110,700 10,211,800 10,314,000 10,417,100 2 Increased Revenue Due to Adjustments 1,333,400 2,882,100 4,552,400 6,471,500 7,687,500 9,008,600 10,443,600 12,001,200 13,243,000 14,565,100 3 Subtotal Rate Revenue $ 10,858,000 $ 12,502,000 $ 14,268,400 $ 16,284,800 $ 17,598,900 $ 19,019,100 $ 20,554,300 $ 22,213,000 $ 23,557,000 $ 24,982,200 Other Operating Revenue
4 System Maintenance 102,500 104,600 106,700 108,800 111,000 113,200 115,500 117,800 120,200 122,600 5 South Bay Water Recycling System Maintenance 1,162,400 1,204,900 1,248,800 1,302,700 1,345,400 1,389,800 1,422,800 1,473,300 1,511,500 1,553,600 6 Subtotal Other Operating Revenue $ 1,264,900 $ 1,309,500 $ 1,355,500 $ 1,411,500 $ 1,456,400 $ 1,503,000 $ 1,538,300 $ 1,591,100 $ 1,631,700 $ 1,676,200 Transfers From
7 RW Capital Fund 0 0 0 0 0 0 0 0 0 0
8 Subtotal Transfers From $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 9 Total Revenue $ 12,122,900 $ 13,811,500 $ 15,623,900 $ 17,696,300 $ 19,055,300 $ 20,522,100 $ 22,092,600 $ 23,804,100 $ 25,188,700 $ 26,658,400 Revenue Requirements
Operating & Maintenance
10 O&M Expenses 12,688,600 13,922,100 15,279,700 16,788,500 18,179,800 19,691,000 21,248,100 22,955,100 24,740,100 26,675,700 11 Subtotal O&M 12,688,600 13,922,100 15,279,700 16,788,500 18,179,800 19,691,000 21,248,100 22,955,100 24,740,100 26,675,700 Debt Service
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 Service 0 0 0 0 0 0 0 0 0 0
Transfers
15 Transfer to Rate Stabilization Reserve 150,000 150,000 150,000 200,000 200,000 150,000 150,000 150,000 150,000 100,000 16 Transfer to Operating Reserve 328,700 304,100 334,800 372,000 343,100 372,600 384,000 420,900 440,100 477,300 17 Transfer to Recycled Water Const Fund 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 18 Total Transfers 528,700 504,100 534,800 622,000 593,100 572,600 584,000 620,900 640,100 627,300 19 Total Revenue Requirements $ 13,217,300 $ 14,426,200 $ 15,814,500 $ 17,410,500 $ 18,772,900 $ 20,263,600 $ 21,832,100 $ 23,576,000 $ 25,380,200 $ 27,303,000 20 Net Annual Cash Balance (1,094,400) (614,700) (190,600) 285,800 282,400 258,500 260,500 228,100 (191,500) (644,600) 21 Beginning Fund Balance 2,005,400 911,000 296,300 105,700 391,500 673,900 932,400 1,192,900 1,421,000 1,229,500 22 Net Cumulative Fund Balance $ 911,000 $ 296,300 $ 105,700 $ 391,500 $ 673,900 $ 932,400 $ 1,192,900 $ 1,421,000 $ 1,229,500 $ 584,900 23 Unrestricted + Operating Reserve $ 4,039,700 $ 3,729,100 $ 3,873,300 $ 4,531,100 $ 5,156,600 $ 5,787,700 $ 6,432,200 $ 7,081,200 $ 7,329,800 $ 7,162,500 24 Minimum Operating Reserves (90 Days) 3,128,700 $ $ 3,432,800 $ 3,767,600 $ 4,139,600 $ 4,482,700 $ 4,855,300 $ 5,239,300 $ 5,660,200 $ 6,100,300 $ 6,577,600 Line No. Description
City of Santa Clara, CA | Water and Sewer Rate Study
BLACK & VEATCH | Appendix A – Ten-Year Financial Plan 7-3 Sewer Utility
Fiscal Year Ending June 30,
FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 Revenue
Rate Revenue
1 Revenue from Existing Rates 54,488,800 55,094,500 55,713,800 55,852,600 55,992,400 56,132,500 56,272,300 56,413,200 56,554,300 56,695,500 2 Increased Revenue Due to Adjustments 4,767,800 11,411,500 17,592,600 21,310,900 25,231,900 25,295,200 25,358,200 25,421,600 25,485,100 25,548,900 3 Subtotal Rate Revenue $ 59,256,600 $ 66,506,000 $ 73,306,400 $ 77,163,500 $ 81,224,300 $ 81,427,700 $ 81,630,500 $ 81,834,800 $ 82,039,400 $ 82,244,400 Other Operating Revenue
4 System Administration (Interest Income) 663,600 676,000 688,600 701,500 714,600 728,000 741,600 755,500 769,700 784,200 5 System Maintenance 20,400 20,400 20,400 20,400 20,400 20,400 20,400 20,400 20,400 20,400 6 Operations 560,000 560,000 560,000 560,000 560,000 560,000 560,000 560,000 560,000 560,000 7 SJ SC Water 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 $ 1,244,000 $ 1,256,400 $ 1,269,000 $ 1,281,900 $ 1,295,000 $ 1,308,400 $ 1,322,000 $ 1,335,900 $ 1,350,100 $ 1,364,600 10 Total Revenue $ 60,500,600 $ 67,762,400 $ 74,575,400 $ 78,445,400 $ 82,519,300 $ 82,736,100 $ 82,952,500 $ 83,170,700 $ 83,389,500 $ 83,609,000 Revenue Requirements
Operating & Maintenance
11 O&M Expenses 44,166,600 45,345,600 46,547,600 47,693,900 48,785,600 49,843,500 50,869,500 52,000,800 53,134,800 54,315,000 12 Subtotal O&M $ 44,166,600 $ 45,345,600 $ 46,547,600 $ 47,693,900 $ 48,785,600 $ 49,843,500 $ 50,869,500 $ 52,000,800 $ 53,134,800 $ 54,315,000 Debt Service
13 Existing Loans/Bonds 3,298,300 3,297,800 3,300,300 3,300,500 3,298,500 2,361,800 2,360,100 2,360,800 2,358,800 2,359,100 14 Proposed Loans/Bonds 1,203,200 1,203,200 2,173,500 2,173,500 4,502,200 4,502,200 4,502,200 4,502,200 4,502,200 4,502,200 15 Total Debt Service $ 4,501,500 $ 4,501,000 $ 5,473,800 $ 5,474,000 $ 7,800,700 $ 6,864,000 $ 6,862,300 $ 6,863,000 $ 6,861,000 $ 6,861,300 Transfers
16 Transfer to Other Fund 6,900 47,100 47,100 47,100 47,100 47,100 47,100 47,100 47,100 47,100 17 Transfer to Rate Stabilization Reserve 600,000 600,000 600,000 600,000 600,000 600,000 200,000 50,000 50,000 50,000 18 Transfer to Pension Stabilization Reserve 0 0 0 0 0 0 0 0 0 0 19 Transfer to Operating Reserve (5,457,900) 290,700 296,400 282,600 269,200 260,900 253,000 278,900 279,600 291,000 20 Transfer to Sewer Construction Fund 15,500,000 15,500,000 15,500,000 15,500,000 40,500,000 15,500,000 13,500,000 13,500,000 10,500,000 10,500,000 21 Total Transfers $ 10,649,000 $ 16,437,800 $ 16,443,500 $ 16,429,700 $ 41,416,300 $ 16,408,000 $ 14,000,100 $ 13,876,000 $ 10,876,700 $ 10,888,100 22 Total Revenue Requirements $ 59,317,100 $ 66,284,400 $ 68,464,900 $ 69,597,600 $ 98,002,600 $ 73,115,500 $ 71,731,900 $ 72,739,800 $ 70,872,500 $ 72,064,400 23 Net Annual Cash Balance 1,183,500 1,478,000 6,110,500 8,847,800 (15,483,300) 9,620,600 11,220,600 10,430,900 12,517,000 11,544,600 24 Beginning Fund Balance 4,622,368 5,805,868 5,541,568 11,652,068 20,499,868 5,016,568 14,637,168 25,857,768 36,288,668 48,805,668 25 Net Cumulative Fund Balance $ 5,805,868 $ 7,283,868 $ 11,652,068 $ 20,499,868 $ 5,016,568 $ 14,637,168 $ 25,857,768 $ 36,288,668 $ 48,805,668 $ 60,350,268 26 Unrestricted + Operating Reserve 16,696,268 18,464,968 23,129,568 32,259,968 17,045,868 26,927,368 38,400,968 49,110,768 61,907,368 73,742,968 27 Minimum Operating Reserves (90 Days) 10,890,400 11,181,100 11,477,500 11,760,100 12,029,300 12,290,200 12,543,200 12,822,100 13,101,700 13,392,700 28 Debt Service Coverage (Min 1.25) 3.63 4.98 5.12 5.62 4.32 4.79 4.68 4.54 4.41 4.27 ----------------
Line No. Description
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
26-335 Agenda Date: 6/9/2026

REPORT TO COUNCIL

SUBJECT
Public Meeting for the Renewal of the Santa Clara Tourism Improvement District (SCTID)

BACKGROUND
On May 5, 2026, the City Council adopted a resolution of the City’s intent to renew the Santa Clara Tourism Improvement District (SCTID) for five years starting July 1, 2026.

TOURISM IMPROVEMENT DISTRICTS
Tourism Improvement Districts (TIDs) utilize the efficiencies of private sector operation in the marketbased promotion of tourism. These special assessment districts allow assessed business owners to organize their efforts to increase tourism. Business owners within the TID fund the TID, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TID.

In California, TIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between TIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TID.

The SCTID was originally formed in 2005 under the 1989 Parking and Business Improvement Area Law, covering eleven lodging businesses near the Convention Center with a $1.00 per occupied room night assessment. Beginning in FY 2019/20, lodging businesses pursued reconstitution under the 1994 Law to transition to a percentage-based assessment, though COVID-19 prompted Council to temporarily postpone conversion and renew the district under the 1989 Law in April 2020.

Following renewed Council direction in January 2021 and petitions representing 76.51% of the total assessment, Council adopted a Resolution of Formation on May 25, 2021, establishing the current SCTID under the 1994 Law for a five-year term (July 1, 2021 through June 30, 2026) with an initial assessment of 1.5% of gross short-term room rental revenue and the option to increase to 2% in year two.

The Silicon Valley/Santa Clara DMO, Inc. (dba Discover Santa Clara) serves as the SCTID’s Owners’ Association and implements the programs in accordance with the Council approved Management District Plan (Plan). As part of the May 5, 2026 item to adopt a resolution of the City’s intent to renew the SCTID, the proposed renewed 5-year Plan was included with the report (Attachment 1).

DISCUSSION
A summary of the key provisions of the SCTID Plan are as follows:
· Location: The renewed SCTID includes all lodging businesses with ten (10) rooms or more, City of Santa Clara Page 1 of 4 Printed on 6/5/2026
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26-335 Agenda Date: 6/9/2026
· Location: The renewed SCTID includes all lodging businesses with ten (10) rooms or more, existing or in the future, available for public occupancy, located within the boundaries of a portion of the City of Santa Clara (City). Lodging businesses do not include short-term rentals, including units within a multi-family building permitted to operate as short-term rentals. · Services: The SCTID is designed to provide specific benefits directly to payors by increasing room night sales. Marketing, communications programs, convention center and partner sales, and other activities will increase overnight tourism and market payors as tourist, meeting and event destimations.
· Budget: The total SCTID annual budget for the first year is anticipated to be approximately $4.05M.
· Cost: The annual assessment rate is two percent (2%) of gross short-term sleeping room rental revenue. During the SCTID term, the assessment rate may be increased to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed lodging businesses. The Silicon Valley / Santa Clara DMO, Inc. dba Discover Santa Clara Board of Directors (the “Board”) shall have the authority to increase the rate to a maximum assessment rate of three percent (3%). If the assessment rate is increased, it may subsequently be decreased, subject to Board approval as described in Section V of the Plan, but shall not be decreased below a minimum of two percent (2%) of gross short-term sleeping room rental revenue. The maximum assessment increase or decrease permitted in any year shall be one-half percent (0.5%). Increases to the assessment rate shall be subject to the approval of the Board and assessed lodging business owners, as described in Section V of the Plan.
· Collection: The City will be responsible for collecting the assessment on a monthly basis (including any interest and overdue charges) from each assessed lodging business. The City will take all reasonable efforts to collect the assessments from each assessed lodging business. The City will forward the assessments collected to Discover Santa Clara each month.
· Duration: The renewed SCTID will have a five (5) year life, beginning July 1, 2026 through June 30, 2031.
· Management: Discover Santa Clara will serve as the SCTID’s Owners’ Association. The Owners’ Association is charged with managing the funds and implementing programs in accordance with the Plan and must provide annual reports to the City Council.

SCTID Renewal Process
The SCTID Renewal Process requires several hearing and notices, prior to City Council adoption as outlined below. The City’s adoption of a Resolution of Intention (Resolution) containing the details of the SCTID, date and time for a public hearing, and other statutorily required information. The City subsequently mailed a copy of the Resolution and notices of public meeting and public hearing to the owners of all businesses proposed to be assessed within the SCTID have been completed.

May 5, 2026 - Resolution of Intention (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the renewed SCTID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to renew the SCTID by the adoption of a resolution expressing its intention to renew the SCTID.

As of May 27, 2026, petitions in favor of SCTID formation were submitted by ten (10) lodging City of Santa Clara Page 2 of 4 Printed on 6/5/2026
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26-335 Agenda Date: 6/9/2026
As of May 27, 2026, petitions in favor of SCTID formation were submitted by ten (10) lodging businesses, which represented 93.09% of the total TID assessment. This majority petition allowed the Council to initiate proceedings for the SCTID renewal.

No later than May 9, 2026 - Mailing Resolution and Notice (COMPLETED) The 94 Law requires the City to mail a copy of the Resolution and written notice of both the public meeting and public hearing to the owners of all businesses proposed to be assessed within the SCTID. Mailing the notice begins a mandatory forty-five (45) day period in which assessed business owners may protest SCTID renewal.

June 9, 2026 - Public Meeting
Allow public testimony on the renewal of the SCTID and levy of assessments. There is no action required by the City Council at this public meeting.

June 23, 2026 - Final Public Hearing
If written protests are received from the owners of businesses in the renewed SCTID which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.

If the Council, following the public hearing, decides to establish the renewed SCTID, the Council shall adopt a resolution of formation.

ENVIRONMENTAL REVIEW
The proposed action does not constitute a “project” within the meaning of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378(a), as it has no potential to result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

FISCAL IMPACT
None immediately. The City will receive a fee of two percent (2%) of the amount collected to cover its cost of administration. The amount is approximately $80,958.24 based on the annual SCTID revenue estimate of $4,047,912. Because the SCTID programs are intended to increase visitation to the City, there may be an increase in transient occupancy tax and sales tax collections.

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

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 agenda report 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.

RECOMMENDATION
City of Santa Clara Page 3 of 4 Printed on 6/5/2026
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26-335 Agenda Date: 6/9/2026
Hold Public Meeting to allow public testimony regarding the Renewal of the Santa Clara Tourism Improvement District (SCTID) and related assessments.

Reviewed by: Aracely Azevedo, Assistant City Manager
Approved by: Jovan D. Grogan, City Manager

ATTACHMENTS

1. SCTID Management District Plan
City of Santa Clara Page 4 of 4 Printed on 6/5/2026
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441603.1
441603.1
441603.1
2026-2031

SANTA CLARA

TOURISM IMPROVEMENT DISTRICT

MANAGEMENT DISTRICT PLAN
Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. April 21, 2026

TABLE OF CONTENTS
I. OVERVIEW..............................................................................................................................................................3 II. BACKGROUND.......................................................................................................................................................5 III. ACCOMPLISHMENTS ..........................................................................................................................................6 IV. BOUNDARY............................................................................................................................................................ 11 V. ASSESSMENT BUDGET AND SERVICES ....................................................................................................... 13 A. ANNUAL SERVICE PLAN..................................................................................................................................................................................13 B. ANNUAL BUDGET...............................................................................................................................................................................................16 C. CALIFORNIA CONSTITUTIONAL COMPLIANCE........................................................................................................................................17 D. ASSESSMENT......................................................................................................................................................................................................18 E. INTEREST AND OVERDUE CHARGES .........................................................................................................................................................20 F. TIME AND MANNER FOR COLLECTING ASSESSMENTS.......................................................................................................................20 VI. GOVERNANCE......................................................................................................................................................21 A.OWNERS’ ASSOCIATION ..................................................................................................................................................................................21 B. BROWN ACT AND CALIFORNIA PUBLIC RECORDS ACT COMPLIANCE............................................................................................21 C.ANNUAL REPORT ................................................................................................................................................................................................21 APPENDIX 1 – LAW.........................................................................................................................................................22 APPENDIX 2 – ASSESSED BUSINESSES .................................................................................................................. 34 Prepared by
Civitas
(916) 437-4300
www.civitasadvisors.com

••• • • CIVITAS
PARTNERSHIPS • PROGRESS • PROSPERITY

DISCOVER
SA~TR
CLARA.

SCTID MANAGEMENT DISTRICT PLAN
APRIL 21, 2026
3 I. OVERVIEW
Developed by Santa Clara lodging businesses and Silicon Valley/Santa Clara DMO, Inc. dba Discover Santa Clara® (“Discover Santa Clara® or DMO”), the Santa Clara Tourism Improvement District (“SCTID”) is an assessment district proposed to continue to provide specific benefits to payors by funding marketing, communications, and convention center and partner sales services for assessed lodging businesses. This approach has been used successfully in other destination areas throughout the country to provide the benefit of additional room night sales directly to payors. The SCTID was initially created in 2021 for a five (5) year term. Santa Clara lodging businesses and the DMO now wish to renew the SCTID for an additional five (5) year term.

Location: The renewed SCTID includes all lodging businesses with ten (10) rooms or more, existing and in the future, available for public occupancy located within the boundaries of a portion of the city of Santa Clara, as shown on the map and defined in Section IV.

Services: The SCTID is designed to provide specific benefits directly to payors by increasing awareness and demand for room night sales. Marketing, communication programs, and convention center and partner sales, and other improvements and activities set forth in this Management District Plan (“Plan”), will increase demand for overnight tourism and market payors for tourist, meeting and event destinations, thereby increasing demand for room nights.

Budget: The total SCTID annual assessment budget for the initial year of its five (5) year operation is anticipated to be approximately $4,047,912. A similar assessment budget is expected to apply to subsequent years, but this assessment budget is expected to fluctuate as room sales do, as businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

Cost: The annual assessment rate is two percent (2%) of gross short-term sleeping room rental revenue. During the SCTID term, the assessment rate may be increased to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed lodging businesses. The DMO Board of Directors (the “Board”) shall have the authority to increase the rate to a maximum assessment rate of three percent (3%). If the assessment rate is increased, it may subsequently be decreased, subject to Board approval as described in Section V of this Plan, but shall not be decreased below a minimum of two percent (2%) of gross short-term sleeping room rental revenue. The maximum assessment increase or decrease permitted in any year shall be one-half percent (0.5%).

Increases to the assessment rate shall be subject to the approval of the Board and assessed lodging business owners, as described in Section V of this Plan.

SCTID MANAGEMENT DISTRICT PLAN
APRIL 21, 2026
4 listing the employee’s name and stating that the stay is for official government business. The dates of occupancy must also be included. These requirements must be demonstrated by the guest at the time of registration. Failure to satisfy these requirements will result in no assessment exemption. Copies of the documentation for each exemption claimed must be submitted to the City’s Director of Finance with each remittance of assessments.

Collection: Each assessed lodging business located in the boundaries of the SCTID shall be responsible for remitting the assessments to the City in accordance with this Plan.

The City will be responsible for collecting the assessment on a monthly basis (including any interest and overdue charges) from each assessed lodging business located in the boundaries of the SCTID. The City shall take all reasonable efforts to collect the assessments from each assessed lodging business and may charge SCTID its proportionate share of collection costs.

Duration: The renewed SCTID will have a five (5) year life, beginning July 1, 2026, or as soon as possible thereafter, and ending five (5) years from its start date. After five (5) years, the SCTID may be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code Section 36600 et seq. (“94 Law”) if assessed lodging business owners support continuing the SCTID programs.

Management: The DMO shall continue to serve as the SCTID’s Owners’ Association. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan and must provide annual reports to the City Council.

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5 II. BACKGROUND
TIDs are an evolution of the traditional Business Improvement District. The first TID was formed in West Hollywood, California in 1989. Since then, over 100 California destinations have followed suit. In recent years, other states have begun adopting the California model: Illinois, Minnesota, Massachusetts, Montana, South Dakota, Washington, Colorado, Texas, and Louisiana have adopted TID laws. Several other states are in the process of adopting their own legislation. The cities of Wichita, Kansas and Newark, New Jersey used existing business improvement district laws to form TIDs. Additionally, some cities, like Portland, Oregon and Memphis, Tennessee have utilized their home rule powers to create TIDs without a state law.

California’s TIDs collectively raise over
$300 million annually for local destination
marketing. With competitors raising their
budgets, and increasing rivalry for visitor
dollars, it is important that Santa Clara
lodging businesses continue to invest in
stable, commerce-specific marketing
programs.

TIDs utilize the efficiencies of private
sector operation in the market-based
promotion of tourism districts. TIDs allow
tourism business owners to organize their
efforts to increase commerce. Lodging
business owners within the TID pay an assessment and those funds are used to provide services that increase commerce.

In California, most TIDs are formed pursuant to the Property and Business Improvement District Law of 1994. This law allows for the creation of a benefit assessment district to raise funds within a specific geographic area. The key difference between TIDs and other benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the district for expenditures consistent with plans like this one. They are intended to supplement, not supplant, existing government funding and services for the specific benefit of the assessed businesses.

There are many benefits to TIDs:
• Funds must be spent on services and improvements that provide a specific benefit only to those who pay;
• Funds cannot be diverted to general government programs; • They are customized to fit the needs of payors in each destination; • They allow for a wide range of services;
• They are designed, created and governed by those who will pay the assessment; and • They provide a stable, long-term funding source for tourism promotion. 1 2
4 6
9 12
19 25
29 32
38 46
61 64
70 75
88 95
99 101
104
109
110
114
113113113
115
116
0 20
40 60
80 100
120
Number of Districts Operating in
California
__ ....• 111111111

SCTID MANAGEMENT DISTRICT PLAN
APRIL 21, 2026
6 III. ACCOMPLISHMENTS
Organizational Formation and Strategic Evolution: Since its establishment, Discover Santa Clara® has evolved from a start-up organization into a fully operational Destination Marketing Organization with the team, systems, and partnerships in place to deliver results. Over the past fiscal year, the DMO advanced its sales, marketing, and operational capabilities, strengthened financial stewardship, and positioned Santa Clara to capitalize on major global opportunities ahead—including Super Bowl LX and the FIFA World Cup 2026. The following highlights reflect key accomplishments achieved through collaboration with our SCTID hotel partners, the City, and industry stakeholders.

Metrics reflect performance through the close of FY 2024/25, with select indicators updated to reflect early FY 2025/26 activity where relevant.

ORGANIZATIONAL SUCCESS: TEAM ACHIEVEMENTS AND INDUSTRY ACCOLADES.

I. Administrative Operational Advancement & Governance
• Executive Leadership and Team Build-Out: Following the hiring of a new CEO in October 2022, Discover Santa Clara® built out its full organizational structure. Under her leadership, the DMO strategically assembled a high-performing team that now includes a Director of Business Operations, Directors of Sales & Marketing, two Sales Managers, a Manager of Data & Strategy, a Marketing Manager, and a Marketing Coordinator. With staggered onboarding over two and a half years, the full team of nine was in place in March 2025. • Established Financial Infrastructure: Developed and completed Financial Standard Operating Procedures (SOPs) in collaboration with our Accounting Firm Krisch & Company and City representatives. These SOPs were approved by the Board in January 2024 and serve as one of the steps necessary for the DMO’s readiness to gain financial independence. • Launched a 401(k) Program: Introduced a formal retirement benefits program for all fulltime employees, demonstrating long-term commitment to staff well-being and organizational maturity.
• Implemented Performance Management and Incentive Programs to Drive Accountability and Results: Implemented a comprehensive performance management framework creating a structured Annual Review Process that includes quarterly check-ins and year-end evaluations aligned to individual goals and broader organizational Key Performance Indicators (KPIs). Additionally, designed and rolled out incentive compensation plans and goal-setting processes for all eligible positions, linking performance with accountability to drive resultsdriven behavior. • Modernized Administrative Systems:
o Developed and gained Board approval for the organization’s first-ever Travel & Entertainment Policy to guide responsible spending, improve reporting accuracy, and establish accountability standards.
o Introduced Corporate Credit Cards through Bridge Bank to streamline business purchasing, travel, and reimbursements.
o Finalized revenue reconciliation for 2019–2021 with the City and the former Chamber of Commerce DMO.
o Created SOPs and internal systems to guide reporting, vendor management, and City contract tracking.
• Strengthened Governance & Reporting:
o Delivered quarterly and annual reports to the Board of Directors and SCTID partners.

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7 o Facilitated Board of Directors elections and onboarding processes. o Initiated Civitas-led Board training in January 2025 to strengthen governance alignment and introduce the SCTID renewal process.
• Strategic Team Alignment: Implemented cadence of all-staff strategic offsite meetings focused on cross-functional planning, budget alignment, and team development, including The Enneagram Training for deeper understanding of team dynamics. • Strong Financial Performance & Stewardship (FY 2024/25):
o SCTID assessment outperformed projections ($3.2M vs. $2.6M forecast) o Generated $160,000 in new interest revenue on assessment funds. o Closed FY 2024/25 with an approximately $600,000 year-end surplus to fund future activities, reflecting strong assessment performance and expense management.

II. Sales & Convention Strategy
• Strategic Sales Deployment: Implemented a market-segment deployment model, aligning sales team members by verticals such as corporate, sports, and association to better engage planners and strategically grow business opportunities. • Sales Lead Growth & Expanded Booking Scope: Within the Priority (P1–P5) classification system—where groups are ranked by peak room demand and convention center spend—P1– P3 represent the highest-value, long-term business driving the greatest economic impact.

FY 2024/25 marked the first full year with a fully staffed sales team and the expansion of the DMO’s booking scope to include management of P3 leads generated through direct sales efforts. As a result, total lead volume increased 46% year-over-year, with the DMO generating 101 P1–P3 leads, up from 72 the prior year. This growth was driven by proactive prospecting, targeted sales trips, and consistent client engagement. • Secured Priority 1 (P1) + Priority 2 (P2) Events: Secured multiple P2 and self-contained groups for future years driving both room nights for our SCTID hotel partners and revenue for the Convention Center. Successfully delivered the DMO’s first P1 citywide group to actualization, with the event completed and generating over $1M in revenue. • Tradeshow & Industry Presence: Engaged in 25 strategically selected tradeshows and sales missions, including IMEX, TEAMS, MPI, IPEC, Connect Spring, and RCMA, targeting corporate, association, sports, and affinity segments to drive direct planner engagement and elevate Santa Clara’s visibility.
• Strategic Partnerships: Established strategic partnerships with leading tourism and meetings industry organizations – including U.S. Travel, CalTravel, Meeting Professionals International, SF Travel, HelmsBriscoe, and ConferenceDirect – expanding access to key client databases, industry events, and high-value meeting planner networks. • Sales-Driven Marketing Integration: Partnered with marketing to create targeted sales materials, custom collateral, and pre-post campaigns supporting key tradeshows and sales missions. Integrated meetings-focused content into the broader strategy to ensure alignment with planner needs and enhance Santa Clara’s visibility as a premier meetings destination.
• CRM & Data Modernization: Completed a comprehensive audit and cleanup of the Simpleview Customer Relationship Management tool, integrated strategic prospecting tools including ZoomInfo and Cvent BI Dashboard, enhanced STR (Smith Travel Accommodations Report) reporting, and advanced implementation of the Tourism Economics Symphony platform to strengthen data capture, marketing attribution, return on investment (ROI) measurement, and partner decision-making.
• Backyard Acquisition Strategy: Rolled out a local account acquisition plan targeting 1,500 regional companies, hosting site visits and client events to showcase SCTID partner hotels and City assets, including the Convention Center, to the meeting planner community.

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APRIL 21, 2026
8 Community Visibility & Upcoming Signature Events
• Super Bowl LX and FIFA World Cup 2026 Readiness: Finalized and received Board approval for the SBLX/FWC26 Activation Plan - including public relations strategies, influencer content, an Ultimate Sports Playbook, enhanced digital presence, and a Media & Meeting Planner Familiarization Trip - with many elements already executed and others advancing toward completion.

The plan has delivered high-value media and public relations exposure for the City and DMO, including the launch of the Global Games Food Trail, securing early placements in Forbes and Vogue. The DMO also finalized a partnership with the Bay Area Host Committee, unlocking unique marketing, sales, and visibility opportunities tied to these global events. • Hosted VIP & Media Events:
o Hosted the Bay Area Travel Writers Group: Welcomed influential local media to showcase Santa Clara’s unique offerings and strengthen relationships with key travel writers.
o Hosted Los Angeles Media Mission: Hosted a cooking class activation led by Chef Nelson Ramirez of the Santa Clara Marriott, for ten key Los Angeles media representatives, reinforcing the city’s identity as a global gathering place for international fans and global cuisine ahead of Super Bowl LX and FWC26. o Collaborated with Levi’s® Stadium for North America Trailer Dealers Association (NATDA) joint event.
o Partnered with DMO’s including Visit Salt Lake City, Visit Oakland, Team San Jose, and SF Travel to co-host key client events – creating shared opportunities to showcase Santa Clara and build planner relationships.
o Hosted multiple client events at Levi’s® Stadium, engaging planners through premium experiences at 49ers games and major concerts to strengthen relationships, showcase the destination, and secure more leads.
o Citywide Media Success: Supported the City of Santa Clara in crafting the narrative around Beyoncé and Taylor Swift concert visits, positioning the City as the “Swiftie Capital of the USA,” and elevating national exposure.

III. Marketing, Brand Development & Visibility
• Omnichannel Marketing Ecosystem: Completed a competitive RFP process and appointed Madden Media to execute on the Omnichannel Marketing project, resulting in the delivery of the following tools and assets to actively support sales, marketing, public relations, our SCTID partner hotels and city partners.
o A newly launched Discover Santa Clara ® redesigned website with 360º hotel tours, SEO optimization, real-time SCTID hotel partner booking widget, and multi-language support.
o Published the city’s first-ever Visitors Guide.
o Established consistent unified brand voice and PR strategy. o Built a reusable, high-quality photo/video content library. • Marketing Agency of Record (AOR): Completed a competitive RFP process and appointed Madden Media as the DMO’s AOR in March 2025 to support key marketing initiatives.

Establishing an AOR ensures brand consistency, streamlined communication, project execution, and enables the DMO to respond more swiftly to opportunities with a partner deeply aligned to its evolving goals including:
o Shaping the DMO’s Public Relations and Communications narrative,

SCTID MANAGEMENT DISTRICT PLAN
APRIL 21, 2026
9 o Partnering to manage our digital marketing strategy and budget, o Creating a Meetings & Conventions specific video for sales & marketing purposes, o Supporting the execution of the DMO’s SBLX/FWC26 Activation Plan. • Collateral & Presentation Tools: Created and modernized customer facing sales collateral, presentations, and internal reporting templates to align with our brand look and feel. • Digital Audience & Engagement Growth: With the establishment of a dedicated Marketing Team in May 2023 and building from a minimal digital footprint typical of a start-up DMO, Discover Santa Clara® has achieved exceptional growth across its owned channels, significantly expanding reach and engagement with core audiences. o Instagram: Grew from 79 to more than 21,232 followers, representing a significantly expanding destination awareness through high-performing event, experiential, and partner-driven content.
o LinkedIn: Expanded from 240 to more than 2,745 followers, strengthening reach and credibility within the meetings, business, and industry community. o Facebook: Grew from 14 to more than 5,174 followers, increasing visibility for citywide events, partner activations, and destination storytelling. o Email Marketing: Subscriber base grew from 1,935 to more than 28,464, enabling stronger campaign reach and more targeted communication with key audiences. o TikTok Platform Expansion: Launched TikTok as a test channel in early 2025 to extend reach through short-form video. Early performance demonstrated strong organic reach and engagement, prompting a strategic expansion of the platform to reach younger audiences and complement broader digital efforts. o Blogs: Published 33+ original blog pieces across two fiscal years, including highperforming evergreen content such as Business Travel Guide and Top 60 Things To Do in Santa Clara.
• Influencer Collaborations: Executed multiple influencer campaigns, generating an impressive 5.1M impressions in collaboration with SCTID partner hotels and key Santa Clara venues, including event tie-ins at Levi’s® Stadium and California’s Great America. Launched the Santa Clara Influencer Catalog to formalize future collaboration processes and efforts. • Strategic Advertising:
o Partnered with CBS on two executions of The 49ers Experience, showcasing Discover Santa Clara® and all 11 SCTID hotel partners through 15-second spotlight segments delivering significant brand exposure for the city.
o Coverage in San Jose Mercury News, CBS Bay Area, KTVU, and the Silicon Valley Business Journal.
o Recognized by Casino.org and San Jose Mercury News as the “Swiftie Capital of the USA” in 2023, positioning the DMO for creative destination branding.

IV. Team Awards & Accolades
The Discover Santa Clara® team has been recognized for its leadership, innovation, and industry presence. These accolades reflect the DMO’s increasing influence and credibility within the meetings, destination marketing, and tourism sectors. • Christine Lawson, President & CEO
o Honored as one of Silicon Valley Business Journal’s (SVBJ) Top 100 Women of Influence in 2024.
o Recipient of Smart Meetings’ Visionary Leader Award in 2024. o Named one of the Power 100 Most Influential People in Silicon Valley in 2025. o Panelist at the Future of Santa Clara event in both 2024 and 2025. o Invited contributor to The Mercury News’ Monthly Insights & Indicators Column.

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10 o Featured across multiple media outlets; ABC7, CBS Bay Area, KTVU, and the Mercury News during Levi’s® Stadium event coverage, reinforcing Santa Clara’s position as a dynamic destination.
o Invited mentor participant for SVBJ’s Mentorship Monday event in 2025. • Katelyn Riccardi, Director of Marketing
o Named one of SVBJ’s 40 Under 40 in 2024.
o Invited mentor participant for SVBJ’s Mentorship Monday event in 2024. o Appointed to the Board of Directors for the Triton Museum of Art in 2024. • Ben Landis, Marketing Manager
o Named to Destinations International’s and CalTravel’s 30 Under 30 Class of 2025 recognizing rising stars shaping the future of destination marketing.

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11 IV. BOUNDARY
The SCTID shall continue to include all lodging businesses with ten (10) rooms or more, existing and in the future, available for public occupancy within the boundaries of a portion of the City, as shown in the map on the following page.

Lodging business means: any structure, or any portion of any structure, that is occupied or intended or designed for occupancy by transients for dwelling, lodging, or sleeping purposes, and includes, but is not limited to, any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home, or house trailer at a fixed location, or other similar structure or portion thereof. The term “lodging business” does not include short-term rentals, including units within a multi-family building permitted to operate as shortterm rentals.

A complete listing of assessed lodging businesses within the renewed SCTID can be found in Appendix

2. SCTID MANAGEMENT DISTRICT PLAN
APRIL 21, 2026
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SCTID MANAGEMENT DISTRICT PLAN
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13 V. ASSESSMENT BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of conferring the benefits or granting the privileges. The privileges and services provided with the SCTID funds are marketing, communications programs, convention center and partner sales, and other improvements and activities set forth in this Plan, available only to assessed lodging businesses within the SCTID.

A service plan assessment budget has been developed to deliver services that benefit the assessed lodging businesses. A detailed annual assessment budget will be developed and approved by the Board. The chart below illustrates the initial annual assessment budget allocations. These activities and allocations will also apply in subsequent years, subject to the stipulations in this Plan. The total initial assessment budget is estimated to be $4,047,912.

Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the City and the Board shall have the authority to adjust budget allocations between the categories by no more than twenty percent (20%) of the total budget per year. A description of the proposed improvements and activities for the initial year of operation is below. The same activities are proposed for subsequent years. In the event of a legal challenge against the SCTID, any and all assessment funds may be used for the costs of defending the SCTID and its assessment.

Each budget category includes all costs related to providing that service. For example, the marketing, communications, and convention center and partner sales budget includes the cost of staff time dedicated to overseeing and implementing the marketing, communications program, and convention center and partner sales. Staff time dedicated purely to administrative tasks is allocated to the administrative portion of the budget. The costs of an individual staff member may be allocated to multiple budget categories. The staffing levels necessary to provide the services below will be determined by the DMO, and approved by the Board, on an as-needed basis.

Marketing,
Communications, and
Convention Center
and Partner Sales
70%, $2,833,538
Administration, 25%,
$1,011,978
Contingency, 3%,
$121,437
City Administration Fee, 2%,
$80,958
Initial Annual Assessment Budget (2%) -
$4,047,912

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14 Marketing, Communications, and Convention Center and Partner Sales The Marketing, Communications Program, and Convention Center and Partner Sales Program is designed to position Santa Clara as a premier destination for meetings, events, and leisure tourism by combining strategic sales initiatives with targeted marketing and communications efforts. This program focuses on driving overnight stays at assessed businesses, supported by demand at Santa Clara venues such as the Convention Center and sport complexes, and includes the attraction of selfcontained and hybrid events. The goal is to increase overnight visitation to assessed lodging businesses and strengthen the destination’s visibility for major events and transient visitors. To achieve this, the program will leverage both proactive sales efforts and innovative digital marketing strategies, to reach a broader audience. Program activities may include, but are not limited to, the following activities:
• Promote and market Santa Clara as a premier destination for group events, meetings, and conventions, with a focus on driving room night demand to assessed businesses and generating strong ancillary revenue. This will be achieved through digital advertising, enhanced online presence, print collateral, and social media outreach. • Develop and implement marketing strategies that position Santa Clara as a competitive leisure and group travel destination. Efforts shall highlight city assets, including attractions, venues, and assessed lodging businesses, to increase awareness and drive visitation to assessed lodging businesses.
• Engage in sales activity to market and sell the destination as a whole, including but not limited to the Convention Center, to drive room night sales at assessed lodging businesses and generate commensurate revenue across the destination.
• Engage in sales activities and targeted outreach to generate new bookings and drive room night demand from Santa Clara event attendees and group travelers utilizing the Convention Center and other partner venues, such as sports complexes, entertainment venues, and unique event spaces that contribute to overnight hotel stays at assessed lodging businesses. • Engage in sales activities and targeted outreach to generate new bookings and increase room night production from self-contained group business, and other group travelers to assessed businesses.
• Coordinate the booking and reservation of meeting spaces, hotel room blocks, and off-site venues to ensure a seamless experience for planners and attendees. • Host exhibits at industry trade shows, attend association events, and participate in destination marketing forums to generate leads and elevate Santa Clara’s visibility as a leading meetings, business, and tourism destination that drives overnight visitation to assessed lodging businesses.
• Conduct familiarization trips and site visits for prospective clients and meeting planners to promote Santa Clara’s assets and hospitality offerings that support overnight stays at assessed lodging businesses.
• Host key and in-market client events for current and prospective meeting planners and business influencers to showcase assessed businesses and partner venues that increase awareness, generate group lead volume, and drive demand at assessed lodging businesses. • Develop and distribute promotional materials highlighting Santa Clara’s assessed businesses and their offerings to support meeting planner decision-making and increase overnight stays. • Implement competitive incentive programs in partnership with assessed lodging businesses and key Santa Clara venues to attract new marquee events and conventions that generate overnight visitation.
• Provide destination planning support to associations, businesses, and organizations holding events in Santa Clara, with a focus on increasing room night generation at assessed lodging businesses through coordination with the Convention Center operator and other local venue and service providers.

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15 • Manage and continue to evolve the destination website to showcase Santa Clara as a desirable location for events and activities that drive overnight stays at assessed lodging businesses. • Conduct coordinated advertising, public relations, and promotional campaigns that highlight Santa Clara attractions and amenities to increase group bookings and attract transient travelers, driving overnight stays at assessed lodging businesses. • Establish stronger partnerships with regional and national event planners, third-party booking agencies, and local tourism stakeholders to increase visibility and generate leads that have the potential to convert into room nights at assessed lodging businesses. • Utilize industry research, destination analytics, and hotel performance data to inform sales and marketing strategies, identify high-value market segments, and optimize efforts that convert leads into overnight stays at assessed lodging businesses. • Develop and pursue multi-year agreements with meeting planners and event organizers to secure repeat business that generates consistent overnight visitation at assessed lodging businesses.
• Engage target industries and market segments through focused outreach to secure meetings and events that align with Santa Clara’s destination strengths and drive room night demand to assessed lodging businesses.
• Develop sales & marketing campaigns and packages that pair stays at assessed lodging businesses with local experiences to attract weekend and shoulder-season travelers. • Plan and execute paid advertising campaigns across digital platforms and traditional media channels. Activities may include search engine marketing, programmatic display, social media advertising, print, radio, or out-of-home placements targeted to drive website traffic and overnight bookings at assessed lodging businesses.
• Identify, contract, and manage influencer partnerships to expand reach and drive awareness in target markets to drive room night demand to assessed lodging businesses. • Develop and manage cooperative marketing programs with assessed lodging businesses, including seasonal promotions and shared advertising initiatives. • Plan and execute marketing campaigns with strategic travel and media partners to drive overnight visitation to assessed lodging businesses through targeted promotions, enhanced visibility, and destination-aligned messaging and branding. • Develop and distribute the official Santa Clara Visitor Guide in print and digital formats, highlighting attractions, assessed lodging businesses, and visitor resources. • Manage and grow all owned marketing channels, including social media platforms and email databases, to expand reach and engagement with prospective visitors. • Create and distribute dynamic digital content—including short-form video, event-centric itineraries, and user-generated content—that highlights Santa Clara’s assessed lodging businesses, venues, and experiences to influence booking decisions for both group and transient travel.
• Collaborate with tourism-aligned brands, influencers, and content creators to elevate Santa Clara’s destination messaging and drive measurable increases in overnight visitation to assessed lodging businesses.

Administration
The administration portion of the SCTID budget provides management, coordination and support to all organizational services and functions. Administration is responsible for the general oversight and fiscal health of the organization and the budget will be used to support administrative staffing costs, office costs, policy development, and other general administrative costs such as insurance, legal, human resources, and accounting.

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16 Contingency
The budget includes a contingency line item to account for uncollected assessments, if any. Funds may be collected and set aside in a contingency account and utilized for other programs or renewal costs consistent with the Plan as deemed appropriate by the Board. Contingency funds may be spent on SCTID programs or administrative renewal costs in such proportions as determined appropriate by the Board. This program represents three percent (3%) of the total annual assessment budget.

Reserve
DMO may maintain a reserve fund in accordance with this Plan. Reserve funds shall be expended in furtherance of the programs, activities, and services set forth in this Plan. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve fund shall be set by the Board.

City Administration Fee
The City shall retain a fee equal to two percent (2%) of the amount of assessment collected to cover its costs of collection and administration of the SCTID assessment which may include but are not limited to: staffing costs, legal services, telephone, supplies, postage, and other general office expenses.

B. Annual Budget
The total five (5) year assessment budget is projected at approximately $4,047,912 annually, or $27,323,406 through the five (5) year term of the SCTID if the maximum assessment rate increases of one-half percent (0.5%) per year, up to a maximum rate of three percent (3%), are adopted as outlined in the table below. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, as businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

The annual assessment rate is two percent (2%) of gross short-term sleeping room rental revenue.

During the SCTID term, the assessment rate may be increased to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed lodging businesses. The Board shall have the authority to increase the rate to a maximum assessment rate of three percent (3%). If the assessment rate is increased, it may subsequently be decreased, subject to Board approval as described in Subsection D of this Section V, but shall not be decreased below a minimum of two percent (2%) of gross short-term sleeping room rental revenue. The maximum assessment increase or decrease permitted in any year shall be one-half percent (0.5%). Increases to the assessment rate shall be subject to the approval of the Board, and assessed lodging business owners, as described in Subsection D of this Section V.

The table below demonstrates the estimated maximum budget with the assumption that the assessment rate will be increased at the earliest opportunity as it is a required disclosure, it is not the anticipated course of action. Alternate courses of action may be taken in regard to implementing the assessment rate increase other than what is demonstrated in the chart below, within the parameters of this Plan.

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17 Estimated Annual Budget if Maximum Assessment Rates Are Adopted 2026 – 2031
Year
Marketing,
Communications,
and Convention
Center and
Partner Sales
Administration Contingency
City
Administration
Fee Total
2026-27 $2,833,538 $1,011,978 $121,437 $80,958 $4,047,912 2027-28 $3,541,923 $1,264,973 $151,797 $101,198 $5,059,890 2028-29 $4,250,308 $1,517,967 $182,156 $121,437 $6,071,868 2029-30 $4,250,308 $1,517,967 $182,156 $121,437 $6,071,868 2030-31 $4,250,308 $1,517,967 $182,156 $121,437 $6,071,868 Total $19,126,384 $6,830,852 $819,702 $546,468 $27,323,406 C. California Constitutional Compliance
The SCTID assessment is not a property-based assessment subject to the requirements of Proposition 218. Courts have found Proposition 218 limited the term ‘assessments’ to levies on real property.1 Rather, the SCTID assessment is a business-based assessment, and is subject to Proposition

26. Pursuant to Proposition 26, all levies are a tax unless they fit one of seven exceptions. Two of these exceptions apply to the SCTID, a “specific benefit” and a “specific government service.” Both require that the costs of benefits or services do not exceed the reasonable costs to the City of conferring the benefits or providing the services.

1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, “a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.”2 The services in this Plan are designed to provide targeted benefits directly to assessed lodging businesses, and are intended only to provide benefits and services directly to those lodging businesses paying the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific businesses within the SCTID.

The activities described in this Plan are specifically targeted to increase demand for room night sales for assessed lodging businesses within the boundaries of the SCTID and are narrowly tailored. SCTID funds will be used exclusively to provide the specific benefit of increased demand for room night sales directly to the assessees. Assessment funds shall not be used to feature non-assessed lodging businesses in SCTID programs, or to directly generate sales for non-assessed lodging businesses. The activities paid for from assessment revenues are business services constituting and providing specific benefits to the assessed lodging businesses. Nothing in this Plan limits the ability of the Owners’ Association to enter into private contracts with non-assessed lodging businesses for the provision of services to those businesses with non-assessment funding.

The assessment imposed by this SCTID is for a specific benefit conferred directly to the payors that is not provided to those not charged. The specific benefit conferred directly to the payors is an increase in demand for room night sales via targeted marketing. The specific benefit of an increase in demand for room night sales for assessed lodging businesses will be provided only to lodging businesses paying the SCTID assessment, with marketing, sales and communications programs 1 Howard Jarvis Taxpayers Assn. v. the City of San Diego (1999) 72 Cal App. 4th 230. 2 Cal. Const. art XIII C § 1(e)(1).

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18 promoting only lodging businesses paying the SCTID assessment. The marketing, communications, and convention center and partner sales programs will be designed to increase room night sales at assessed lodging businesses.

Because they are necessary to provide the marketing, communications, convention center and partner sales programs that specifically benefit the assessed lodging businesses, the reserves, administration and contingency services also provide the specific benefit of increased demand for room night sales to the assessed lodging businesses.

Although SCTID, in providing specific benefits to payors, may produce incidental benefits to nonpaying businesses, the incidental benefit does not preclude the services from being considered a specific benefit. The Legislature has found that, “A specific benefit is not excluded from classification as a ‘specific benefit’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific benefit to the payor.”3

2. Specific Government Service
The assessment may also be utilized to provide, “a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.”4 The Legislature has recognized that marketing and promotions services like those to be provided by the SCTID are government services within the meaning of Proposition 265.

3. Reasonable Cost
SCTID services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by the DMO, and reports submitted on an annual basis to the City. Only assessed lodging businesses will be featured in marketing materials, receive sales leads generated from SCTIDfunded activities, be featured in advertising campaigns, and benefit from other SCTID-funded services.

The assessed lodging business list was compiled from records provided by the jurisdiction and complies with the requirements of the 94 Law. Pursuant to Streets and Highways Code Section 36615, the City Council’s determination of ownership is final and conclusive, with no obligation to obtain other information. Non-assessed lodging businesses will not receive these, nor any other, SCTID-funded services and benefits.

The SCTID-funded programs are targeted directly to benefit assessed lodging businesses. It is, however, possible that there will be a spillover benefit to non-assessed lodging businesses. If nonassessed lodging businesses receive incremental room nights, that portion of the promotion or program generating those room nights shall be paid with non-SCTID funds. SCTID funds shall only be spent to benefit the assessed lodging businesses and shall not be spent on that portion of any program which directly generates incidental room nights for non-assessed lodging businesses.

D. Assessment
The annual assessment rate is two percent (2%) of gross short-term sleeping room rental revenue.

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19 described below, but shall not be decreased below a minimum of two percent (2%) of gross shortterm sleeping room rental revenue. The maximum assessment increase or decrease permitted in any year shall be one-half percent (0.5%). Increases to the assessment rate shall be subject to the approval of the Board and assessed lodging business owners, as described below.

The DMO shall provide notice to assessed businesses with a clear disclosure of the rationale for an assessment increase tied to programs, projects, or services that enhance brand exposure and equity for Santa Clara as a destination and directly drive room night demand. To approve an assessment rate increase, the DMO shall secure signed petitions from assessed business owners totaling more than fifty percent (50%) of the assessed lodging businesses in the SCTID. If sufficient petitions are received, the Owners' Association's Board shall vote to adjust the assessment rate in accordance with the assessment structure reflected in the petitions, thereby aligning the rate with the preferences expressed by the assessed businesses.

While any increase in the assessment rate must follow the approval process outlined above, a proposed decrease may be approved by a vote of the Board.

Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days; or stays by any officer or employee of a foreign government who is exempt by reason of express provision of Federal law or international treaty. Additionally, assessments will not be collected on stays by any Federal or State of California officer or employee on official business who shall provide one of the following: a warrant or check drawn on the Treasury of the United States; a copy of the official travel orders indicating the issuing governmental agency and the employee’s full name; or, a copy of a letter on the official letterhead of an exempt governmental agency requesting exemption and listing the employee’s name and stating that the stay is for official government business. The dates of occupancy must also be included. These requirements must be demonstrated by the guest at the time of registration. Failure to satisfy these requirements will result in no assessment exemption. Copies of the documentation for each exemption claimed must be submitted to the Director of Finance with each remittance of assessments.

The assessment was calculated based on the total cost of the activities to be provided for the benefit of the businesses within the SCTID, with costs allocated based on the proportional benefit conferred to each business. Activities funded by the SCTID, are specifically targeted to increase room nights at assessed lodging businesses. All room night sales do not represent the same benefit to the payors.

For example, a higher priced room night is of greater benefit than a lower priced room night because the assessee derives greater revenue. To account for this benefit differential and to make sure the benefits are proportional, an assessment formula based on a percentage of revenue has been selected. The proposed formula accurately reflects greater benefit to assessed SCTID businesses with higher priced room nights.

The term “gross short-term sleeping room rental revenue” as used herein means: the consideration received, whether or not actually charged by the lodging business, for the occupancy of space in a lodging business valued in money, whether said gross short-term sleeping room rental revenue is received in money, goods, labor, or otherwise, including all receipts, cash, credits, and property and services of any kind or nature. A lodging business may provide complimentary non-assessable rooms for employee use; guest satisfaction or charitable purposes (by a qualified 501(c)(3) charity) and a lodging business shall detail all complimentary non-assessable rooms in its regular reporting. Failure to accurately report complimentary rooms shall result in assessment of the rooms in question. Gross short-term sleeping room rental revenue shall not include, and therefore the assessment shall not be charged upon, any federal, state or local taxes collected, including but not limited to transient occupancy taxes.

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20 The assessment is levied upon and a direct obligation of the assessed lodging business. However, the assessed lodging business may, at its discretion, pass the assessment on to transients. The amount of assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for payment from the business. If the SCTID assessment is identified separately it shall be disclosed as the “SCTID Assessment.” As an alternative, the disclosure may include the amount of the SCTID assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing Act, Government Code §13995 et seq. and shall be disclosed as the “Tourism Assessment.” The assessment is imposed solely upon and is the sole obligation of the assessed lodging business even if it is passed on to transients. The assessment shall not be considered revenue of the assessed lodging businesses for any purpose, including calculation of transient occupancy taxes.

Bonds or any debt obligation shall not be issued.

E. Interest and Overdue Charges
The SCTID shall reimburse the City for any costs associated with collecting unpaid assessments. If sums in excess of the delinquent SCTID assessment are sought to be recovered in the same collection action by the City, the SCTID shall bear its pro rata share of such collection costs. Assessed lodging businesses which are delinquent in paying the assessment shall be responsible for paying:

1. Original Delinquency: Any lodging business that fails to remit any assessment imposed within the time required shall pay interest as described in subparagraph 3 below.

2. Overdue Charge for Willful Noncompliance or Repeated Delinquencies: If the City determines that the nonpayment of any remittance due is due to willful noncompliance or repeated delinquencies, an overdue charge of twenty-five percent (25%) of the amount of the assessment shall be added thereto in addition to the interest as required by subparagraph 3 below.

3. Calculation of Interest: In addition to the overdue charges imposed, any lodging business that fails to remit any assessment imposed shall pay interest at the rate of the United States government T-Bills sold at the latest sale prior to the date of the delinquency plus three percent (3%) prorated per month or fraction thereof on the amount of the assessment, exclusive of overdue charges, from the date on which the remittance first became delinquent until paid.

4. Overdue Charges and Interest Merged with Assessment: Except for the purpose of calculation of interest and overdue charges, every overdue charge imposed and such interest as accrues under the provisions of this section shall become a part of the assessment herein and subject to collection in the same manner as assessments.

F. Time and Manner for Collecting Assessments
The SCTID assessment will be implemented beginning July 1, 2026, or as soon as possible thereafter, and ending five (5) years from its start date. The City will be responsible for collecting the assessment on a monthly basis (including any interest and overdue charges) from each assessed lodging business.

The City shall take all reasonable efforts to collect the assessments from each assessed lodging business. The City shall forward the assessments collected to the Owners’ Association. Unless the City otherwise provides by ordinance, resolution or written policy, assessments will be collected in the same manner, and at the same time, as City transient occupancy taxes.

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21 VI. GOVERNANCE
A. Owners’ Association
The City Council, through adoption of this Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the SCTID as defined in Streets and Highways Code §36612. The City Council has determined that Silicon Valley/Santa Clara DMO, Inc. dba Discover Santa Clara® will continue to serve as the Owners’ Association for the SCTID.

B. Brown Act and California Public Records Act Compliance An Owners’ Association is a private entity and may not be considered a public entity for any purpose, nor may its Board members or staff be considered to be public officials for any purpose. The Owners’ Association is, however, subject to government regulations relating to transparency, namely the Ralph M. Brown Act and the California Public Records Act when acting in that capacity. These regulations are designed to promote public accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown Act (Government Code §54950 et seq.). Thus, meetings of the Board and certain committees must be held in compliance with the public notice and other requirements of the Brown Act. Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action. The Owners’ Association is also subject to the record keeping and disclosure requirements of the California Public Records Act.

Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action.

C. Annual Report
The DMO shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year. • An estimate of the cost of providing the improvements and the activities for that fiscal year. • The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.

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22 APPENDIX 1 – LAW
CURRENT THROUGH CH. 790 OF THE LEGISLATION FROM THE 2025-2026 REGULAR SESSION, EFFECTIVE AS OF OCTOBER 13, 2025

STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part

This part shall be known and may be cited as the “Property and Business Improvement District Law of 1994.” 36601. Legislative findings and declarations; Legislative guidance

The Legislature finds and declares all of the following:
(a) Businesses located and operating within business districts in some of this state’s communities are economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow business districts to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that receive benefits from those improvements.
(d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific benefit upon the businesses in a business district are not taxes for the general benefit of a city, even if property, businesses, or persons not assessed receive incidental or collateral effects that benefit them. (e) Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become even more important tools with which communities can combat blight, promote economic opportunities, and create a clean and safe environment. (g) Since the enactment of this act, the people of California have adopted Proposition 218, which added Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of, and activities, expenditures, and assessments by property-based districts. Article XIII D of the Constitution provides that property-based districts may only levy assessments for special benefits. (h) The act amending this section is intended to provide the Legislature’s guidance with regard to this act, its interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits in property-based districts.
(1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this act, which discourages the use of assessments to fund needed improvements, maintenance, and activities in property-based districts, contributing to blight and other underutilization of property. (2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed. Therefore, for special benefits to exist as a separate and distinct category from general

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23 benefits, the incidental or collateral effects of those special benefits are inherently part of those special benefits. The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits. (3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits. Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.
36602. Purpose of part

The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act.

This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. 36603. Preemption of authority or charter city to adopt ordinances levying assessments

Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)).
36603.5. Part prevails over conflicting provisions

Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part.
36604. Severability

This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes.

ARTICLE 2. Definitions
36606. “Activities”

“Activities” means, but is not limited to, all of the following that benefit businesses or real property in the district:
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. “Assessment”

“Assessment” means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district.
36607. “Business”

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24 “Business” means all types of businesses and includes financial institutions and professions. 36608. “City”

“City” means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. “City council”

“City council” means the city council of a city or the board of supervisors of a county, or the agency, commission, or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. “Clerk”

“Clerk” means the clerk of the legislative body.
36609.5. “General benefit”

“General benefit” means, for purposes of a property-based district, any benefit that is not a “special benefit” as defined in Section 36615.5.
36610. “Improvement”

“Improvement” means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years or more including, but not limited to, the following:
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters and signs. (c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
(i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Management district plan”; “Plan”

“Management district plan” or “plan” means a proposal as defined in Section 36622. 36612. “Owners’ association”

“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. An owners’ association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners’ association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district. 36614. “Property”

“Property” means real property situated within a district.

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25 36614.5. “Property and business improvement district”; “District”

“Property and business improvement district,” or “district,” means a property and business improvement district established pursuant to this part.
36614.6. “Property-based assessment”

“Property-based assessment” means any assessment made pursuant to this part upon real property. 36614.7. “Property-based district”

“Property-based district” means any district in which a city levies a property-based assessment. 36615. “Property owner”; “Business owner”; “Owner”

“Property owner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of land by the city council. “Business owner” means any person recognized by the city as the owner of the business. “Owner” means either a business owner or a property owner. The city council has no obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. “Special benefit”

(a) “Special benefit” means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value. (b) “Special benefit” also includes, for purposes of a property-based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. “Tenant”

“Tenant” means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.

ARTICLE 3. Prior Law
36617. Alternate method of financing certain improvements and activities; Effect on other provisions

This part provides an alternative method of financing certain improvements and activities. The provisions of this part shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and effective and is unaffected by this part.

CHAPTER 2. Establishment
36620. Establishment of property and business improvement district

A property and business improvement district may be established as provided in this chapter. 36620.5. Requirement of consent of city council

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26 A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city. 36621. Initiation of proceedings; Petition of property or business owners in proposed district

(a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district. The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained. (3) Information specifying that the complete management district plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623.
36622. Contents of management district plan

The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the first year’s proposed improvements, maintenance, and activities

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27 and a statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years.

Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k)
(1) A list of the properties or businesses to be assessed, including the assessor’s parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a propertybased district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel.
(3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-based district, a detailed engineer’s report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan.
(m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment

(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be

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28 mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest.

If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners. 36624. Changes to proposed assessments

At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation

(a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district.
(4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.

Notwithstanding the foregoing, improvements and activities that must be provided outside the

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29 district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district. (7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit.
(8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan.
36627. Notice and assessment diagram

Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses

The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners

The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any propertybased assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories

All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district

If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.

CHAPTER 3. Assessments
36631. Time and manner of collection of assessments; Delinquent payments

The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties.

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30 36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property

(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part. 36633. Time for contesting validity of assessment

The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment.
36634. Service contracts authorized to establish levels of city services

The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan

The owners’ association may, at any time, request that the city council modify the management district plan. Any modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention

(a) Upon the written request of the owners’ association, the city council may modify the management district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing.
(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps

Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627. 36638. Assessment as government imposed fee on Civ C § 1770 transaction

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31 (a) A business assessment pursuant to this part is a fee imposed by a government on the transaction for purposes of paragraph (29) of subdivision (a) of Section 1770 of the Civil Code. (b) This section shall become operative on July 1, 2024.

CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments

(a) The city council may, by resolution, determine and declare that bonds shall be issued to finance the estimated cost of some or all of the proposed improvements described in the resolution of formation adopted pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) or in conjunction with Marks-Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915 may be modified by the city council as necessary to accommodate assessments levied upon business pursuant to this part. (b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of those improvements, specify the number of annual installments and the fiscal years during which they are to be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated to be raised from assessments over 30 years.
(c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt.

CHAPTER 4. Governance
36650. Report by owners’ association; Approval or modification by city council

(a) The owners’ association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. The owners’ association’s first report shall be due after the first year of operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used.
(b) The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. (2) The improvements, maintenance, and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
(c) The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636.

The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of

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32 assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district.
36651. Designation of owners’ association to provide improvements, maintenance, and activities

The management district plan may, but is not required to, state that an owners’ association will provide the improvements, maintenance, and activities described in the management district plan. If the management district plan designates an owners’ association, the city shall contract with the designated nonprofit corporation to provide services.

CHAPTER 5. Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit

(a) Any district previously established whose term has expired, or will expire, may be renewed by following the procedures for establishment as provided in this chapter. (b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed district includes additional parcels or businesses not included in the prior district, the remaining revenues shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels shall be refunded to the owners of these parcels or businesses. (c) Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments, improvements, or activities of a renewed district be the same as the original or prior district.

CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure

(a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances:
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment.
(2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment.
(b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district

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33 (a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.

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34 APPENDIX 2 – ASSESSED BUSINESSES*
SCTID Hotels Address City State
Zip
Code
AC Hotel Santa Clara 2970 Lakeside Drive Santa Clara CA 95054 Avatar Hotel Santa Clara a
Tapestry Collection by Hilton
4200 Great America
Parkway Santa Clara CA 95054
Delta Hotel by Marriott - Santa
Clara Silicon Valley 2151 Laurelwood Road Santa Clara CA 95054 Element Santa Clara 1950 Wyatt Drive Santa Clara CA 95054 Embassy Suites Santa Clara -
Silicon Valley 2885 Lakeside Drive Santa Clara CA 95054 Hilton Santa Clara
4949 Great America
Parkway Santa Clara CA 95054
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Marriott Santa Clara
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Blvd Santa Clara CA 95054
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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
26-534 Agenda Date: 6/9/2026

REPORT TO COUNCIL

SUBJECT
Public Hearing: Action on Adoption of the Proposed FY 2026/27 & FY 2027/28 Biennial Capital Improvement Program Budget, Approval of FY 2026/27 Operating Budget Amendments, and Adoption of the FY 2026/2027 Housing Authority Budget, and Sports and Open Space Authority Budget

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 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 2026/27 Adopted Operating Budget are also included. The Proposed Budget is attached to the memorandum as Attachment 1 and can be found online at:
https://www.santaclaraca.gov/our-city/departments-a-f/finance#docaccess403832be86ca37ea9ad81f99cd0cf602 <https://www.santaclaraca.gov/our-city/departments-af/finance>.

In addition, a summary of the Proposed Budget has been prepared. The Budget-in-Brief is included as Attachment 2 to this report and is posted on the City’s website at:
https://www.santaclaraca.gov/our-city/departments-a-f/finance#docaccess4dffa809279e7780410e24fc7ba1d94c <https://www.santaclaraca.gov/our-city/departments-af/finance>.

The City Council approves a set of Budget Principles each year. These Budget Principles provide a general framework and approach for developing the City’s budget, ensuring fiscal stability by considering both the short and long-term impacts of any funding decisions. For FY 2026/27, the proposed principles are revised to 1) include a new item to focus on fiscal sustainability efforts to better position the City long-term, 2) revise an existing item that would explore expanding existing revenue sources and/or add new revenue sources by specifying that these efforts would address targeted needs; and 3) revise the employee engagement item to include language to inform employees on the content of the budget and priorities for the upcoming year. The City’s Budget and Fiscal Policies are also recommended to be updated to 1) define the Biennial Budget Cycle and 2) update the Capital Projects Reserve section to include the use of this reserve in conjunction with the new Infrastructure Replacement Capital Fund that services as a sinking fund. The proposed FY 2026/27 Budget Principles and Budget and Fiscal Policies are included as Attachment 3 to this report, with the changes to the Budget and Fiscal Policies in bold. These documents also can be City of Santa Clara Page 1 of 11 Printed on 6/5/2026
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found in the Budget and Fiscal Policies section of the Proposed Budget.

Study Sessions were held on May 5, 2026 and May 19, 2026 to allow the City Council and public to review and provide input on the Proposed Budget. At the May 19th City Council meeting, the City Council set the public hearing for the budget on June 9. Responses to questions from the Study Sessions are included in this report.

As required by California Government Code Section 65401, the FY 2026/27 and FY 2027/28 Biennial Capital Improvement Program Budget was reviewed and approved by the Planning Commission for conformity with the City of Santa Clara 2010-2035 General Plan at their May 20, 2026 meeting.

DISCUSSION
City Charter Section 1303 requires that the City Council hold a public hearing on the proposed budget, at which interested parties shall be given an opportunity to be heard. Accordingly, a Public Hearing for this purpose was noticed and scheduled as part of this item after which Council will consider and act on the Proposed FY 2026/27 and FY 2027/28 Biennial Capital Improvement Program Budget, FY 2026/27 Operating Budget Amendment, and the FY 2026/27 Housing Authority Budget and Sports and Open Space Authority Budget.

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 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 Appropriations Limit.

Total Budget Overview
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.

The FY 2026/27 Proposed Budget, which includes appropriations for all operating and capital expenditure activities totals $2.16 billion. Table 1 below summarizes the total budgets by fund group.

Table 1: City of Santa Clara Annual Budget
Fund Type
FY 2025/26
Budget
(Adopted June 2025)
FY 2026/27
Budget
(Adopted June 2025)
FY 2026/27
Proposed Budget
(for June 2026 Adoption)
General Fund $335,374,572 $342,972,517 $368,700,880
Special Revenue Funds 52,037,355 38,806,836 51,809,828
Enterprise Funds 1,012,631,859 1,100,414,703 1,229,597,726 Internal Service Funds 51,672,525 48,281,729 51,505,652 Debt/Other* 273,236,049 27,245,993 64,479,696
Less Transfers, Contributions
and Reserves *
(529,425,156) (302,635,147) (439,939,427)
Subtotal Operating Budget $1,195,527,204 $1,255,086,631 $1,326,154,355 Capital Funds 777,527,724 150,763,062 $840,899,634
Less Transfers, Contributions
and Reserves *
(1,454,000) (1,454,000) (2,154,000)
Subtotal Capital Budget $776,073,724 $149,309,062 $838,745,634 Total Budget $1,971,600,928 $1,404,395,693 $2,164,899,989 City of Santa Clara Page 2 of 11 Printed on 6/5/2026 powered by Legistar™
26-534 Agenda Date: 6/9/2026
Table 1: City of Santa Clara Annual Budget
Fund Type
FY 2025/26
Budget
(Adopted June 2025)
FY 2026/27
Budget
(Adopted June 2025)
FY 2026/27
Proposed Budget
(for June 2026 Adoption)
General Fund $335,374,572 $342,972,517 $368,700,880
Special Revenue Funds 52,037,355 38,806,836 51,809,828
Enterprise Funds 1,012,631,859 1,100,414,703 1,229,597,726 Internal Service Funds 51,672,525 48,281,729 51,505,652 Debt/Other* 273,236,049 27,245,993 64,479,696
Less Transfers, Contributions
and Reserves *
(529,425,156) (302,635,147) (439,939,427)
Subtotal Operating Budget $1,195,527,204 $1,255,086,631 $1,326,154,355 Capital Funds 777,527,724 150,763,062 $840,899,634
Less Transfers, Contributions
and Reserves *
(1,454,000) (1,454,000) (2,154,000)
Subtotal Capital Budget $776,073,724 $149,309,062 $838,745,634 Total Budget $1,971,600,928 $1,404,395,693 $2,164,899,989 *Adjusts for transfers, contributions and reserves to avoid double counting of the same funds (e.g., internal service funds are excluded).

The FY 2026/27 Proposed Budget of $2.16 billion reflects a 9.8% increase from the FY 2025/26 Adopted Budget of $1.97 billion. The FY 2026/27 Proposed Budget is above the FY 2025/26 Adopted Budget primarily due to increases in the General Fund and the Enterprise Funds. The FY 2026/27 Proposed Budget is $760.5 million above the FY 2026/27 Budget approved in June 2025 primarily due to the inclusion of the CIP carryovers and additional planned investments in the capital budget as well as increases in the General Fund and Enterprise Fund budgets.

Biennial Capital Budget
The CIP guides the City in the planning, scheduling, and budgeting of capital investments within each of the twelve theme areas. The FY 2026/27 and FY 2027/28 Biennial Capital Budget and planned 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 $1.07 billion and the five-year CIP totals $1.44 billion.

Table2: Proposed CIP by Theme
Theme
2026/27
Budget
2027/28
Budget
Total Biennial
Budget
Total Five- Year
CIP
Administrative Facilities $38,000,084 $3,482,500 $41,482,584 $42,932,584 Community Facilities $17,434,107 $0 $17,434,107 $17,434,107 Convention Center $275,332 $0 $275,332 $275,332
Electric Utility $492,965,528 $171,415,000 $664,380,528 $870,062,528 Other Community Projects $18,079,475 $3,779,339 $21,858,814 $33,984,432 Parks and Trails $33,575,893 $742,145 $34,318,038 $34,318,038 Sewer Utility $82,254,602 $29,553,430 $111,808,032 $208,569,990 Solid Waste $1,234,160 $3,060,000 $4,294,160 $7,026,516 Storm Drain $27,065,659 $416,000 $27,481,659 $27,931,659 Technology and Equipment $6,873,927 $386,000 $7,259,927 $8,336,927 Transportation $107,986,061 $14,306,541 $122,292,602 $156,016,615 Water and Recycled Water
Utilities
$13,000,806 $5,575,000 $18,575,806 $29,450,806
Total Capital Budget $838,745,634 $232,715,955 $1,071,461,589 $1,436,339,534 City of Santa Clara Page 3 of 11 Printed on 6/5/2026
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Table2: Proposed CIP by Theme
Theme
2026/27
Budget
2027/28
Budget
Total Biennial
Budget
Total Five- Year
CIP
Administrative Facilities $38,000,084 $3,482,500 $41,482,584 $42,932,584 Community Facilities $17,434,107 $0 $17,434,107 $17,434,107 Convention Center $275,332 $0 $275,332 $275,332
Electric Utility $492,965,528 $171,415,000 $664,380,528 $870,062,528 Other Community Projects $18,079,475 $3,779,339 $21,858,814 $33,984,432 Parks and Trails $33,575,893 $742,145 $34,318,038 $34,318,038 Sewer Utility $82,254,602 $29,553,430 $111,808,032 $208,569,990 Solid Waste $1,234,160 $3,060,000 $4,294,160 $7,026,516 Storm Drain $27,065,659 $416,000 $27,481,659 $27,931,659 Technology and Equipment $6,873,927 $386,000 $7,259,927 $8,336,927 Transportation $107,986,061 $14,306,541 $122,292,602 $156,016,615 Water and Recycled Water
Utilities
$13,000,806 $5,575,000 $18,575,806 $29,450,806
Total Capital Budget $838,745,634 $232,715,955 $1,071,461,589 $1,436,339,534 Capital Highlights
Of the $1.44 billion CIP, $1.12 billion (78%) funds capital projects for the City’s utilities and there is sufficient funding in the associated utility funds to support these projects. The other projects total $321.2 million (22%) and fund improvements to the parks, trails, libraries, transportation system, storm system, and other City facilities. Additional investments in these areas are possible due to the voter approval of Measure I in November 2024 that allows the issuance of $400 million in general obligation bonds as well as the use of the General Fund Capital Projects Reserve. With these funds, the City will address many critical infrastructure needs. However, a funding gap remains and unfunded projects identified in this budget total $252.9 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 that total over $1 billion.

Following are some of the key investments by theme in this CIP that are detailed in the Capital Improvement Program section of the Proposed Budget:
· Administrative Facilities - General Obligation Bond Projects include Fire Station 5 Replacement ($2.0 million), Fire Station 7 Replacement ($3.5 million), Fire Training Tower Renovation ($0.8 million), Fire Station Security Upgrade ($1.9 million), Real Time Intelligence Center Feasibility ($0.2 million), Police Training Facility Feasibility and Assessment ($0.3 million), Police Drone First Responder Infrastructure ($0.1 million), and Triton Museum Renovation ($1.0 million).

Other major projects include Public Buildings Parking Lot Improvements ($1.6 million), ADA Transition Plan Implementation (Public Buildings) ($1.8 million), and Electric Vehicle Charging (Fleet) ($1.7 million).
· Community Facilities - General Obligation Bond Projects include Renovation/ Expansion of 3 Public Libraries (Central Library Restrooms & Access Control Redesign; Central Library Lighting Control System Replacement; Central Library Entry Auto Door System Replacement; and Central, Mission, and Northside Libraries Renovation Design) ($1.9 million), Community City of Santa Clara Page 4 of 11 Printed on 6/5/2026
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ISC Aquatic Facility Renovation/ Replacement (Phase 2) ($2.0 million).

Other major projects include Central Park Library - Carpet Replacement ($1.1 million) and Central Park Library - Repaint Interior ($1.0 million). · Convention Center - It is anticipated that a portion of the funding budgeted in FY 2025/26 will be carried over to FY 2026/27 to continue to complete various projects that are underway; no additional funding is allocated in the CIP.
· Electric Utility - Major projects include CAISO 3rd 230V T-Line into NRS ($109.4 million), Transmission Loop 1 ($106.9 million), Spare Equipment Strategy & Procurement ($44.0 million), New Business Estimate ($43.3 million), Homestead Substation Rebuild ($40.0 million), Agnew Rebuild and Expansion ($38.4 million), Transmission and Distribution Capital Maintenance and Betterments ($35.7 million), Major Engine Overhaul and Repair ($34.0 million), South Loop Reconductor ($30.2 million), and DVR Spare Engine Procurement Project ($30.0 million).
· Other Community Projects - Projects include General Obligation Bond Implementation ($10.0 million, supported by the General Fund), Measure I Fixture, Furniture, and Equipment ($5.0 million, supported by the General Fund), Related Santa Clara ($3.8 million), Tasman East Specific Plan Infrastructure Fee Administration ($0.2 million), and ADA Self Evaluation and Transition Plan Update ($50,000).
· Parks and Trails - General Obligation Bond Projects include Warburton Park Playground Renovations ($3.0 million) and Henry Schmidt Park Playground Renovations (funding in FY 2025/26).

Other major projects include Earl Carmichael Park Playground Rehabilitation ($5.7 million), Maywood Park Playground Rehabilitation ($2.8 million), Mary Gomez Park Playground Rehabilitation ($1.8 million), Warburton Park Playground Rehabilitation ($1.1 million), and Park Improvements ($1.0 million).
· Sewer Utility - Major projects include San José-Santa Clara Regional Wastewater Facility ($124.1 million), Sanitary Sewer Capacity Improvements ($14.5 million), Sanitary Sewer System Improvements ($10.0 million), and Sanitary Sewer System Condition Assessment ($5.0 million).
· Solid Waste - Projects include Sanitary Landfill Development - Post Closure ($4.4 million) and Emergency Backup and Collection System Enhancements for Closed Landfill ($2.6 million). · Storm Drain - General Obligation Bond Projects include Green Storm Drain Infrastructure Design & Construction ($6.1 million), Storm Drain System Improvements ($5.0 million), Bowers Ave Underpass SDPS Rehabilitation ($1.7 million), and Storm Drain Renovations ($0.2 million).

Other major projects include Storm Drain Pump Station RTU Upgrade ($1.8 million), Storm Drain Renovations ($0.8 million), Storm Drain Master Plan Update ($0.7 million), Lickmill Storm Drain Pump Station Rehabilitation ($0.4 million), Fairway Glen Storm Drain Pump Station Rehabilitation ($0.4 million), Tri-Level Underpass Storm Drain Pump Station Rehabilitation ($0.2 million), and Anna Drive Neighborhood Flood Protection ($0.1 million; City of Santa Clara Page 5 of 11 Printed on 6/5/2026
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remaining FY 2025/26 funding will be carried over to FY 2026/27). · Technology and Equipment - The projects include Geospatial Information System (GIS) Enterprise System ($1.7 million), Replacement VOIP Phone System for Aging Mitel Connect ($0.2 million), Permit Information System ($50,000), and Fire Station 3 Sprinklers ($31,000). · Transportation - General Obligation Bond Projects include Street Resurfacing and Rehabilitation ($15.2 million), ADA Improvements ($5.0 million), Creek Trail Rehabilitation ($2.3 million), and Bicycle Wayfinding ($0.3 million).

Other projects include Annual Street Maintenance and Pavement Rehabilitation ($45.6 million), Tasman Complete Streets Plan 2021 Improvements Phase I - North San Jose Settlement ($2.9 million), Uncontrolled Crosswalks Improvements ($2.5 million), Sidewalk, Curb and Gutter Repair ($1.9 million), Cupertino-Santa Clara On-Demand Shuttle Project ($1.8 million), Santa Clara Vision Zero Plan - Infrastructure Implementation ($1.3 million), Monroe Street Class II Buffered Bicycle Lane Improvements ($1.3 million), Bridge Maintenance Program ($1.2 million), ADA Transition Plan Implementation (Public Right of Way) ($1.0 million), Traffic Signal Interconnect Upgrade ($0.9 million), Citywide Traffic Intelligence ($0.9 million), Traffic Signal Enhancements ($0.8 million), Quick Build Bike and Pedestrian Safety Project ($0.7 million), and Neighborhood Traffic Calming ($0.6 million). · Water and Recycled Water Utilities - The major projects include Distribution System Replacement/ Restoration ($15.0 million), New and Replacement Wells ($4.5 million), Buildings and Grounds ($1.9 million), Public Works Paving Support - Water ($1.5 million), and Supervisory Control and Data Acquisition (SCADA) Improvements ($0.9 million).

Unfunded Projects
While there is funding available to support the capital projects for the City’s utilities, there is insufficient funding to meet the infrastructure needs in many other areas. Table 3: Unfunded CIP Projects by Theme identifies unfunded projects of $252.9 million that were itemized as part of this CIP process.

Table 3: Unfunded CIP Projects by Theme
Theme Unfunded Projects
Administrative Facilities $28.3 M
Community Facilities $50.0 M
Convention Center $10.4 M
Other Community Projects $0.1 M
Parks and Trails $88.0 M
Storm Drain $21.6 M
Technology and Equipment $0.2 M
Transportation $54.3 M
Total Unfunded Projects $252.9 M
Descriptions of the unfunded projects are provided in the Capital Improvement Program section of the Proposed Budget by theme.

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The unfunded projects identified in the Proposed Budget represent only a portion of the unmet/deferred infrastructure needs in the City, with many significant needs spread across the capital theme areas, including:
· Parks and Recreation Master Plan Phase 1 (Years 1-5 in 2025 dollars) - $185 million to $260 million; new facilities planned for the later phases of the master plan · Library Facilities Master Plan - over $55 million for existing and new facilities (2025 dollars) · Vision Zero Action Plan - $350 million (2025 dollars) of capital improvements on the citywide high-injury network
· Storm Drain Master Plan - $290 million (in 2018 dollars) and the Storm Drain Pump Station Evaluation identified $3 million (2018 dollars) annually for pump station repair, maintenance and upgrades
· Santa Clara Bicycle Plan Update 2018 - $39.3 million (in 2018 dollars) · Santa Clara Pedestrian Master Plan - $194.0 million (in 2019 dollars) · Americans with Disabilities Act Self-Evaluation and Transition Plan (Draft) - $758.5 million (in 2024 dollars)
· Public buildings (e.g., new City Hall, existing City Hall, historic buildings, corporation yard) FY 2026/27 Operating Budget
The Proposed Budget includes updates to FY 2026/27 for all operating funds as reflected in the Source and Use Statements and described in the operating budget changes in the Appendices section of the Proposed Budget document. This includes updated revenue and expenditure estimates for each fund.

FY 2026/27 Operating Budget Amendments
The City Council approved the FY 2025/26 and 2026/27 Biennial Operating Budget in June 2025.

While this year’s budget is focused on the capital budget, amendments to the FY 2026/27 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. With the improved General Fund Forecast, there are a number of service enhancements that are recommended for funding in FY 2026/27, including:
· $2.0 million in the General Fund for City Council priorities; the City Council will determine the use of these one-time funds.
· $1.0 million from the General Fund transferred to the Measure I Bond Projects Furniture, Fixtures and Equipment project in the General Government Capital Fund to cover project related costs that are ineligible for bond proceeds.
· $10.4 million from the General Fund transferred to a new Infrastructure Replacement Capital Fund to replace capital assets that have reached the end of their useful life. · $3.0 million from the General Fund allocated to a Position Restorations Reserve to unfreeze positions that were frozen to address budget shortfalls in previous years. · $4.8 million from the General Fund allocated to the Pension Stabilization Reserve; this City of Santa Clara Page 7 of 11 Printed on 6/5/2026
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contribution is equivalent to one percent of the unfunded liability and is consistent with the targeted annual contribution set forth in the City’s Budget and Fiscal Policies. · Position changes based on organizational reviews conducted for the Public Works and Parks and Recreation Departments to improve effectiveness and service delivery in those departments. Additional organizational reviews are underway and position changes are expected to be brought forward in FY 2026/27 and/or during the FY 2027/28 and FY 2028/29 Proposed Operating Budget process. Additional positions are also recommended to address specific needs.

The 2026/27 Proposed Budget document reflects an increase of 30.25 positions from the 2026/27 Budget approved in June 2025 as detailed in the Budgeted Positions section of this document. This includes a net 6.0 positions that were added during FY 2025/26 after the adoption of the budget (1.0 position added through Report to Council 25-773, 3.0 positions added through Report to Council 25- 725, and a net 2.0 positions added through Report to Council 26-249). An additional 24.25 positions are proposed in this budget, including the following: 13.0 positions associated with organizational reviews for the Parks and Recreation and Public Works Departments; 6.0 positions supported by the Electric Utility (Electric Utility, Finance and Human Resources positions); 3.0 positions in Human Resources, 2.0 positions in the City Manager’s Office; and 0.25 position in the Library Department.

Recommended Changes to the Proposed Budget
A number of changes are recommended to the Proposed Budget as itemized in Attachment 4, including the following:
· Capital Project Carryovers : The carryover of capital funds from FY 2025/26 to FY 2026/27 to complete capital projects totals $476.5 million.
· Operating Budget Carryovers/Other Adjustments: The carryover of operating funds from FY 2025/26 to FY 2026/27 to complete specific purchases and other adjustments, both to operating and capital, total $17.1 million. This incorporates several actions that occurred after the development of the Proposed Budget:
- Adds $400,000 to support efforts to prioritize the Downtown to address feedback from the May 5th Budget Study Session;
- Transfers $200,000 from the General Fund Capital Projects Reserve to the General Government Capital Fund for the painting of the Morse Mansion to address feedback at the May 5th Budget Study Session;
- Transfers $100,000 from the General Fund Capital Projects Reserve to the Public Buildings Capital Fund for the repair of the Berryessa Adobe porch to address feedback at the May 5th Budget Study Session;
- Adds 1.0 Police Captain to the Police Department;
- Adds 1.0 Human Resources Technician and 1.0 Senior Human Resources Technician to the Human Resources Department to support SVP;
- Adds 1.0 Electric Program Manager to support cybersecurity and 1.0 Electric Program Manager to support information technology/operational technology infrastructure projects in City of Santa Clara Page 8 of 11 Printed on 6/5/2026
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the Electric Utility;
- Adds $23,250 for deferred compensation program fiduciary liability insurance; - Adds $1.2 million for a new Pruneridge Complete Streets Plan in the Streets and Highways Capital Fund, funded by a Federal earmark grant ($1.0 million) and matching funds ($0.2 million) from the General Fund Capital Projects Reserve; - Updates to the Housing and Urban Development Annual Action Plan; - Adds $17,000 to the Downtown Parking Maintenance District Fund for maintenance of the fountain at Franklin Mall;
- Recognizes funding of $39,750 from the Library Foundation to support the Read Santa Clara ESL Program;
- Carryover of General Fund savings from FY 2025/26 to FY 2026/27 to support projects and programs in the Fire Department, Human Resources Department, and Non-Departmental; and - Carryover of FY 2025/26 savings to FY 2026/27 in the City Affordable Housing Fund, the Expendable Trust Fund, the Information Technology Services Fund, the Other City Departments Operating Grant Trust Fund, and the Police Operating Grant Trust Fund to support the continuation of projects and programs.

Allocation of FY 2025/26 General Fund Excess Revenue / Future Budget Actions It is anticipated that additional funding from FY 2025/26 will be available in the General Fund from excess revenue and expenditures savings. Budget actions are expected to be brought forward on June 23, 2026 to have a discussion and possible action on the allocation of available fund balance.

This is expected to include increasing the transfer to the new Infrastructure Replacement Fund by approximately $7 million to bring the funding allocation to 5% of General Fund expenditures as well as increasing contributions to the General Fund Capital Projects Reserve and the Unrestricted Ending Fund Balance for future use.

In addition, separate actions will be brought forward to address critical needs at the Convention Center, potentially partially or fully funded from the General Fund Capital Projects Reserve or FY 2025/26 available fund balance. Lastly, an action is also expected to be brought forward to increase funding for community events (e.g., additional night markets) based on an evaluation of potential options, funded from available General Fund fund balance and any sponsorships and/or other sources.

Appropriation Schedules
The appropriation schedules detailing the FY 2026/27 and FY 2027/28 Capital Budgets by fund and the FY 2026/27 Operating Budgets by fund are included as Attachment 5 to this report.

May 5th and May 19 th Budget Study Sessions
At the May 5th Study Session, the City Council and public provided feedback and had questions regarding the Proposed Budget. At the May 19th Study Session, staff provided an overview of the budget and responses to questions from the May 5th Study Session; the City Council planned to City of Santa Clara Page 9 of 11 Printed on 6/5/2026
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submit any additional questions to staff for follow-up.

Responses to the questions from the Study Sessions are included in Attachments 6 and 7 to this report.

Housing Authority Budget
The Housing Authority Fund expenditure budget totals $474,519 in FY 2026/27 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 $12,000 in FY 2026/27 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.

ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to section 15378(a)(4) of Title 14 of the California Code of Regulations in that they are fiscal activities that do not involve any commitment to any specific project which may result in a potentially significant impact on the environment.

FISCAL IMPACT
The Proposed Biennial Capital Budget totals $838.7 million in FY 2026/27 and $232.7 million in FY 2027/28, and the five-year Capital Improvement Program totals $1.44 billion. The Proposed Operating Budget for FY 2026/27 is $1.33 billion. The combined proposed capital and operating budgets for FY 2026/27 totals $2.16 billion.

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

PUBLIC CONTACT
On May 20 and May 27, 2026, notices of the public hearing were published in the Santa Clara Weekly. 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 agenda report 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.

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 2026/27 and FY 2027/28 Biennial Capital Budget, including the recommended revisions, as detailed in Attachment 4 (Majority Affirmative Council Votes Required);

2. Approve the FY 2026/27 Operating Budget changes included in the recommended revisions, City of Santa Clara Page 10 of 11 Printed on 6/5/2026
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as detailed in Attachment 4 (Five Affirmative Council Votes Required);

3. Approve the Appropriation Schedule for capital funds totaling $840,899,634 in FY 2026/27 and $234,169,955 in FY 2027/28 and the FY 2026/27 Appropriation Schedule for operating funds totaling $1,766,093,782, as detailed in Attachment 5 (Majority Affirmative Council Votes Required);

4. Approve the Housing Authority FY 2026/27 expenditure budget of $474,519 as presented in the Proposed Budget (Majority Affirmative Council Votes Required);

5. Approve the Sports and Open Space Authority FY 2026/27 expenditure budget of $12,000 as presented in the Proposed Budget (Majority Affirmative Council Votes Required); and

6. Approve the FY 2026/27 Budget Principles and the revised Budget and Fiscal Policies (Majority Affirmative Council Votes Required).

Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager

ATTACHMENTS

1. FY 2026/27 & FY 2027/28 Biennial Capital Improvement Program Budget and FY 2026/27 Operating Budget Changes

2. FY 2026/27 & FY 2027/28 Proposed Biennial Capital Improvement Program Budget-in-Brief

3. FY 2026/27 Budget Principles and Budget and Fiscal Policies

4. Recommended Revisions to the FY 2026/27 & FY 2027/28 Proposed Biennial Capital Improvement Program Budget and FY 2026/27 Operating Budget Changes, including the carryover of FY 2025/26 funds to FY 2026/27

5. FY 2026/27 and FY 2027/28 Appropriation Schedules

6. Responses to Questions from the May 5th Budget Study Session

7. Responses to Questions from the May 19th Budget Study Session City of Santa Clara Page 11 of 11 Printed on 6/5/2026
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FY 2026/27 and FY 2027/28
Proposed Biennial Capital
Improvement Program
Budget 1
~ Cityof 1
~ Santa Clara
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Transmittal Letter………………………………………………………...………………………....................…...… 7 City Profile………...…………………………………………………………………………………...………………………....................… 39 Budget and Fiscal Policies.…………………………………………………….…...…………………...………………………................ 57 Budget Summary...……………………………………………………………...…………………………...……………………….............. 89 Revenue by Fund...………………………………………………………………………………...………………………................... 91 Expenditure by Fund………………………………………………………………..……………...……………………….................. 94 Transfer Schedule……………......……………………………………..……………....…………...………………………................ 97 CIP Budget by Theme……………………..………………………………………………………...………………………................ 100
CIP Budget by Fund …..…………………………………………………………………..…...…...……….....…. 101 CIP Unfunded List…………………….………………………………………………………...…...………......... 103 CIP Operating Impacts………………………..……………………………………………...…...………......….. 105 CIP Budget by Expenditure Category………………………………............................…...……….................. 106 Measure I General Obligation Bond Program Summary…........................................................................ 107 Summary of Budgeted Positions………….…………………...…..……………………………..…...……….......…...……….....… 115 Debt Service………….…………………...……………………………….…..…………………..…...……….....…… 121 Ten-Year General Fund Financial Forecast……………………..…………………………....…...……….....…… 137 Statements of Sources and Uses of Funds……………………..…………………………....…...……..…...……….....….....…… 157 General Fund………………………………………………………………………..…………...…...……….......…...………......…… 159 Special Revenue and Other Funds……………………………………………...……………..…...……..…...……….....….....… 171 Bridge Maintenance District #2 Fund………………………..…………………………..…...……..…...…………… 178 Building Development Services Fund………………………..…………………………..…...……..…...…………… 179 Building Special Programs and Training Fund……………………….…………………………..…...……..…...…………… 181 City Affordable Housing Fund.…………………………..………………………………....…...……..…...……. 182 Community Facilities District No. 2019-1 (Lawrence Station) Fund……………………..…...……..…...…… 183 Convention Center Maintenance District Fund.…………………………………………...…...……..…...…… 184 Developer Traffic Payments Fund..……………………………….................…………...…...……..…...…… 185 Downtown Parking Maintenance District Fund..……………………………...…………...…...……..…...…… 186 Endowment Care Fund……………..………………………………………………………..…...……..…...…… 187 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T A B LE O F C O N T E NT S

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Special Revenue and Other Funds……………………………………………...……….……..…...……..…...…… Engineering Operating Grant Trust Fund…………………………………………………..…...……..…...…… 188 Expendable Trust Fund ………………………………………………………………………………..…...……..………………. 189 Fire Certified Unified Program Agency (CUPA) Fund ………………………………………………………………………………..…191 Fire Development Services Fund ………………………………………………………………………………..…...……..……………192 Fire Operating Grant Trust Fund ………………………………………………………………………………..…...……..……………193 Gas Tax Fund ………………………………………………………………………………..…...……..………………. 194 Housing and Urban Development Fund ……………………………………………………………..….....…………. 195 Housing Authority Fund ………………………………………………………………………..…...………..………….196 Housing Successor Agency Fund …………………………………………………………………..….....…………... 197 Library Donations Trust Fund ……………………………………………………..…...…...……………………….. 198 Library Operating Grant Trust Fund ……………………………………………..…...…...……………………… 199 Other City Departments Operating Grant Trust Fund ………………………..…...…...…………………………. 200 Parks and Recreation Operating Grant Trust Fund ……………………………………..…...…...………………. 201 Perpetual Care Fund………………………………………………………………..…...…...……………………….. 202 Police Operating Grant Trust Fund………………………………………………………..………………..…...…… 203 Prefunded Plan Review Fund ……………………………………………………………………..………………..…...…… 205 Public Donations Fund ……………………………………………………………………..………………..…...…… 206 Public, Educational, and Governmental Fee Fund ……………………………………...………………..…...…… 208 Road Maintenance and Rehabilitation (SB1) Fund ……………………………………..………………..…...…… 209 Traffic Mitigation Fund ……………………………………………………………………...………………..…...…… 210 Enterprise Funds…………………………………………...………………...………………..…...………………………………… 211 Cemetery Fund.…………………………………………………………………...………………..…...………………...…… 217 Convention Center Enterprise Fund…………………………………………………….……...………………..…...……218 Electric Operating Grant Trust Fund ……………………………………………………...……...………………..…...…… 220 Electric Utility Fund.………………………………………………………………...………………..…...……………………222 Sewer Utility Fund……………………...…………………………………………………………...………………..…...…… 224 Solid Waste Fund.……………………………………………………………...…………………...………………..…...…… 226 Water Recycling Fund……………………………………………………………………………...………………..…...……228 Water Utility Fund…………………………………………………………………………………...………………..…...…… 230 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T A B LE O F C O N T E NT S

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Internal Service Funds………………………...………………………….………………………...………………..…...……233 Communication Acquisitions Fund…...…………………………………………………………………...………………..…...………… 237
Fleet Operations Fund….…………………………………………………………………………………………...………………..…...… 238
Information Technology Services Fund…..……………………………………………………………………...………………..…...…… 239
Public Works Capital Projects Management Fund………………………………………………………………...………………..…...… 240
Special Liability Insurance Fund……...……………………………………………………………………………...………………..…... 241
Unemployment Insurance Fund.…………………………………………………………..………………………...………………..…...… 242
Vehicle Replacement Fund…………………………………………………………………………………………...………………..…... 243
Workers’ Compensation Fund……..………………………………………………………………………………...………………..…...… 244
Capital Improvement Program Funds………………………...…………………………………………..…...…… 245 Cemetery Capital Fund…………….…………………………………………………..……………..…..…...…… 250 City Affordable Housing Capital Fund…………….…………………………………………………..……………..…...…… 251 Convention Center Capital Fund…………….…………………………………………………..……………..…...……252 Electric Utility Capital Fund…………….…………………………………………………..……………..…...…… 253 Fire Department Capital Fund………………...…………………………………………………………..…...…… 257 General Government Capital Fund………………………………………………………..……………..…...…… 259 Infrastructure Replacement Capital Fund…............................................................................................... 261 Library Department Capital Fund………………...………………………………………....……………..…...…… 262 Measure I General Obligation Bond Projects Fund…...................................................................................... 263 Parks and Recreation Capital Fund.………………………………………………………..……………..…...…… 265 Public Buildings Capital Fund..………………………….…………………………………..……………..…...…… 268 Recycled Water Capital Fund………………………………………………………….…....……………..…...…… 270 Related Santa Clara Developer Fund…………………………………………………….....……………..…...…… 271 Sewer Utility Capital Fund …………………………………………………………………..……………..…...…… 272 Solid Waste Capital Fund.…………………………………………………………………...……………..…...…… 274 Storm Drain Capital Fund …………………………………………………………………...……………..…...…… 276 Street Lighting Capital Fund..………………………………………………………………..……………..…...…… 278 Streets and Highways Capital Fund………………………….……………………………..……………..…...…… 279 Tasman East Infrastructure Improvement Fund….................................................................................. 283 Water Utility Capital Fund……..……………………………………………………………..……………..…...…… 284 Other Agency Fund………………………...………………………………..……………….………………………..……………… 287 Sports and Open Space Authority Fund…………………………………………………...…………………..……………… 290 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T A B LE O F C O N T E NT S

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Capital Improvement Program……….……………………………………………………………………………….. 291 Administrative Facilities………..…………………………………….………………………………………..………………… 293 Community Facilities. ……………..………………………………………………………………………………..………………… 325 Convention Center…………………………………………………………………………………………………..………………… 345 Electric Utility………………………….……………………………………………………………………………..………………… 353 Other Community Projects ………………………….……..……………………………..………………………..………………… 407 Parks and Trails………………………...……………………….………………………………..…………………………………… 423 Sewer Utility………………..……………………….………………………………………………..………………………………… 443 Solid Waste…………………………………………………………………………………………..……………… 457 Storm Drain…………………………………………………………………………………………..……………… 465 Technology and Equipment…………………………………………………………………………………………..……………… 493 Transportation…………………………………………………………………………………………………………..……………… 507 Water and Recycled Water Utilities………………………………………………………..………………………..……………… 561 Appendices………………………………………………………………………………………………………………..……………… 575 Budget Amendments Overview…..……………………………………………………………………………..……………… 575 Operating Budget Change Summary – Revenue ………………………..……..………..…………………..……………… 576 Operating Budget Change Summary – Expenditure ………...……………………………………………..………………578 Department Expenditures Change Summary………………………………………………………….…………………..……………… 580 FY 2026/27 Budget Amendments to Adopted Operating Budget Details……………………....…………………..……………… 598 CSMFO Award……………….....................................................………....…………………..……………… 638 GFOA Award……………….....................................................………....…………………..……………… 639 Indices…………………………………………………………………………………………….………………………..……………… 641 CIP Project Index by Theme..………………………………………………………….………………………..……………… 641 CIP Project Index by Department……….…………………………………………….………………………..……………… 648 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R April 28, 2026
Honorable Mayor, City Council and Residents of Santa Clara, I am pleased to present the Proposed Biennial Capital Budget for fiscal years (FY) 2026/27 and 2027/28 and Five-Year Capital Improvement Program (CIP) as well as proposed amendments to the FY 2026/27 Adopted Operating Budget. This continues the biennial budget process that alternates between an operating and capital budget. This year’s budget focuses on achieving fiscal sustainability, capital infrastructure investment, and supporting the direct services and programs that serve our community.

As a result of the City’s prudent fiscal management and strong revenue growth, the proposed budget accomplishes specific objectives in alignment with the City Council priorities. These accomplishments include:
 No reduction of City programs and services
 Resolving the General Fund structural deficit
 Allocating $2 million for City Council priority initiatives  Funding for capital replacement/maintenance ($12.9
million for new projects)
 Establishing and funding for a new Infrastructure
Replacement Reserve Policy to set aside 3% of General
Fund expenditures annually ($10.4 million)
 Funding administrative and project staff to implement the first phase of Measure I capital projects
 Restoring frozen positions
 Adding 22.25 new positions to address organizational
needs and meet performance expectations
Several long-term fiscal challenges and risk remain present. The 10-year General Fund forecast does not fully address
infrastructure needs, enhancements to services resulting from anticipated population growth, nor provide permanent funding for pilot programs (such as the SV Hopper Shuttle Program).

Financial risk factors include:
 Uncertainty regarding results of tariffs and other federal actions
 Economic downturn
 CalPERS actuarial changes or reform actions
 Unanticipated capital/ infrastructure costs
Budget Milestones
April 28: Release of Proposed
Budget
May 5: City Council Study
Session on Proposed
Budget
May 19: City Council Study
Session on Proposed
Budget
June 9: Public Hearing and
Adoption of FY 2026/27
and FY 2027/28
Biennial Capital Budget
and Amendments to
the FY 2026/27
Operating Budget
July 1: Start of Fiscal Year
2026/27
7 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R The Biennial Capital Budget totals $593 million and the Five-Year CIP totals $1.11 billion, supporting infrastructure improvements throughout the City. Of this CIP amount, $928 million (84%) funds capital projects for the City’s utilities and there is sufficient funding in the associated utility funds to support these projects.

The other projects total $185 million (16%) and fund improvements to the parks, trails, libraries, fire stations, transportation system, storm system, and other City facilities. Additional investments in these areas are possible due to the voter approval of Measure I in November 2024 that allows the issuance of $400 million in general obligation bonds as well as the use of the General Fund Capital Projects Reserve. With these funds, the City will address many critical infrastructure needs. However, a funding gap remains and unfunded projects identified in this budget total $252.9 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 that total over $1 billion.

While the focus of this budget is on capital improvements, there are recommended adjustments to the FY 2026/27 operating budget that was adopted last year as part of the FY 2025/26 and FY 2026/27 biennial operating budget. These adjustments update revenue estimates and account for revised labor and nonpersonnel costs in the General Fund and other funds as well as position changes. The General Fund outlook continues to improve with strong revenue growth.

Budget Overview: What Does This Budget Do?
Measure I
GO Bond
Implementation
Capital Project
Delivery
City Services
and
Organizational
Effectiveness
Fiscal
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
 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
8 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R

TOTAL BUDGET OVERVIEW
The FY 2026/27 Proposed Budget totals $1.67 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).

Table 1 below summarizes the total budgets by fund group.

The FY 2026/27 Proposed Budget is below the FY 2025/26 Adopted Budget of $1.97 billion primarily because the carryover of capital funds from FY 2025/26 to FY 2026/27 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 2026/27 Adopted Budget. The FY 2026/27 Proposed Budget is $270.1 million above the FY 2026/27 Budget approved in June 2025 primarily due to additional planned investments in the capital budget, including the first tranche of Measure I Bond Projects. Proposed augmentations to various department staffing and planned debt issuances also contribute to the increase from the previously adopted FY 2026/27 budget.

Guiding Framework
The City Council approves a set of Budget Principles each year. These Budget Principles provide a general framework and approach for developing the City’s budget, ensuring fiscal stability by considering both the short and long-term impacts of any funding decisions. For FY 2026/27, the proposed principles are revised to 1) include a new item to focus on fiscal sustainability efforts to better position the City long-term, 2) revise an existing item that would explore expanding existing revenue sources and/or add new revenue sources by specifying that these efforts would address targeted needs; and 3) revise the employee engagement item to include language to inform employees on the content of the budget and priorities for the upcoming year. The proposed FY 2026/27 Budget Principles can be found in the Budget and Fiscal Policies section of this document. 9 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R

CAPITAL BUDGET OVERVIEW
The CIP guides the City in the planning, scheduling, and budgeting of capital investments within each of the twelve theme areas. The FY 2026/27 and 2027/28 Biennial Capital Budget and CIP is a carefully balanced budget that continues strategic investments in the City’s infrastructure. The Proposed Biennial Capital Budget totals $593.1 million and the five-year CIP totals $1.11 billion.

Capital Project Overview by Theme
Table 2: Proposed CIP by Theme
Theme
2026/27
Budget
2027/28
Budget
Total Biennial
Budget
Total Five-Year
CIP
Administrative Facilities $12,707,950 $3,482,500 $16,190,450 $17,640,450 Community Facilities $6,693,750 $0 $6,693,750 $8,835,750 Convention Center $0 $0 $0 $0
Electric Utility $225,426,000 $171,415,000 $396,841,000 $739,393,000 Other Community Projects $3,824,794 $3,779,339 $7,604,133 $18,968,087 Parks and Trails $7,296,000 $742,145 $8,038,145 $19,874,595 Sewer Utility $30,330,379 $29,553,430 $59,883,809 $156,945,767 Solid Waste $1,234,160 $3,060,000 $4,294,160 $7,026,516 Storm Drain $19,516,300 $416,000 $19,932,300 $20,382,300 Technology and Equipment $557,000 $386,000 $943,000 $2,020,000 Transportation $47,180,632 $14,306,541 $61,487,173 $97,286,186 Water and Recycled Water Utilities $5,575,000 $5,575,000 $11,150,000 $24,425,000 Total Capital Budget $360,341,965 $232,715,955 $593,057,920 $1,112,797,651 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 10 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R 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 Measure I General Obligation Bond funds, 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.

Measure I General Obligation Bond
The Measure I expenditure plan is broken down into the categories below. The detailed plan by project is provided in the General Obligation Bond Program Summary section, including the breakdown of projects funded with the first tranche of bond proceeds during FY 2025/26 and a description of those projects.

Fire 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)
11 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Measure I Timeline
It is expected that the bonds will be issued in three phases and project delivery will go through 2036. This CIP reflects the projects from the first tranche of bond proceeds. The second and third tranches will be reflected in future CIPs.

Measure I Transparency and Accountability
Measure I included several transparency and accountability requirements:
 The bond proceeds can only be spent on projects and programs that serve Santa Clara and must align to the adopted Expenditure Plan, as it may be amended from time to time in accordance with the required process to amend the plan.
 With the exception of the project management and delivery costs, Bond proceeds cannot be used for employee salaries. The City’s administrative costs are capped at 5% of the proceeds.
 The City is required to conduct annual independent performance audits and financial audits, and those audits will be submitted to the California State Auditor for review. The audits will be posted on the City’s website.  The City has appointed a Citizens’ Oversight Committee, also known as the Bond Compliance Oversight Committee, to ensure that Bond proceeds are expended only for the purposes described in the measure approved by the voters.
 A separate fund has been established to account for the Bond proceeds and expenditures.
 At least annually, the Finance Director will report to the City Council on the actual bond proceeds and expenditures and the status of improvements.
 Bond proceeds cannot be used for improvements to Levi’s Stadium, projects within 0.5 miles of Levi’s Stadium (except improvements in existing residential neighborhoods designed to benefit those areas), or improvements that benefit any professional sports team.

Amending the
Expenditure Plan

1. 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.

Tranche 1 (approx. $100 M): 2026 - 2029
Tranche 2 (approx. $200 M): 2028 - 2033
Tranche 3 (approx. $100 M): 2031 - 2036
2026 2036
12 City of
Santa Clara
-------.
----------------~-
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Measure I Bond Compliance Oversight Committee
The Bond Compliance Oversight Committee consists of nine members selected by a lottery process and appointed by the City Council. The committee includes seven residents, one large business representative, and one small business representative (neither of which must be residents, but both must be either an owner or employee of a business headquartered within the City). Additionally, no business representative shall work for, have previously worked for, or be employed by a firm that provides services to any professional sports team within the City.

The role of the Bond Compliance Oversight Committee is to:

1. ensure that project implementation is consistent with all Bond measure requirements, including the terms of the Expenditure Plan;

2. review and report on annual audits;

3. review and provide recommendations to the City Council on any proposed amendment to the Expenditure Plan; and

4. inform the public concerning the expenditure of Bond proceeds.

Information on the Bond Compliance Oversight Committee is provided on the City’s website:
https://www.santaclaraca.gov/our-city/government/city-committees/measure-i-bond-compliance-oversightcommittee.

Use of the Capital Projects Reserve
In the Proposed CIP, the limited CPR provides funding of $15.9 million for capital projects, including $12.9 million for projects identified in this CIP and $3.0 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 $252.9 million of unfunded projects identified over the next five years.

The proposed uses of the limited CPR funds allocate
funding to maintain City assets (e.g., RepairModifications to City Buildings, Repair Historic Buildings, Park Improvements, Storm Drain Repairs
and Maintenance, Central Park Library – Carpet
Replacement, Public Building Parking Lot
Improvements), and meet various requirements and
emerging needs (e.g., ADA Transition Plan
Implementation – Public Buildings, ADA Transition
Plan Implementation – Public Right-of-Way, Bridge
Maintenance Program, Electric Vehicle Charging -
Fleet) as shown in the table below.

Given the limited funding available, several of the projects are funded for the first two years, which represent the Biennial Capital Budget period, with unfunded amounts in the outyears that would have to be addressed in the future CIP as funding allows.

13 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Table 3: FY 2026/27 – FY 2030/31 Five-Year Capital Improvement Program Proposed Use of the General Fund Capital Project Reserve Theme
FY
2026/27
FY
2027/28
FY
2028/29
FY
2029/30
FY
2030/31
5-Year
Total
Administrative Facilities
ADA Transition Plan Implementation
(Public Buildings) $225,000 $750,000 $750,000 $1,725,000 Electric Vehicle Charging (Fleet) $41,000 $328,000 $287,000 $656,000 Fleet Shop Retrofit $119,700 $119,700
Morse Mansion Maintenance & Repair $50,000 $50,000 $100,000 Public Building Parking Lot
Improvements (Triton) $172,500 $1,322,500 $1,495,000
Repair to Historic Buildings $125,000 $125,000 $250,000 Repairs-Modifications to City
Buildings $175,000 $175,000 $350,000
Triton Museum Repair & Modifications $75,000 $35,000 $110,000 Administrative Facilities Total $983,200 $2,785,500 $1,037,000 $0 $0 $4,805,700 Community Facilities
Central Park Library Repaint Interior $522,000 $522,000 $1,044,000 Central Park Library Carpet
Replacement $1,098,000 $1,098,000
Community Facilities Total $0 $0 $1,620,000 $522,000 $0 $2,142,000 Other Community Projects
ADA Self Evaluation and Transition
Plan Update $50,000 $50,000
Other Community Projects Total $50,000 $0 $0 $0 $0 $50,000 Parks and Trails
Park Improvements $489,000 $504,000 $993,000
Parks and Trails Total $489,000 $504,000 $993,000
Storm Drain
Storm Drain Repairs and Maintenance $150,000 $150,000 $150,000 $150,000 $150,000 $750,000 Kiely Blvd.-Saratoga Creek Storm
Drain Outfall Relocation $200,000 $200,000
Storm Drain Master Plan Update $700,000 $700,000
Lickmill Storm Drain Pump Station
Rehabilitation $350,000 $350,000
Tri-Level Underpass Storm Drain
Pump Station Rehabilitation $150,000 $150,000
Fairway Glen Storm Drain Pump
Station Rehabilitation $350,000 $350,000
Storm Drain Pump Station Remote
Terminal Unit (RTU) Upgrade $1,800,000 $1,800,000
Storm Drain Pump Station Outfall
Reconstruction Program $250,000 $250,000
Storm Drain Total $3,700,000 $400,000 $150,000 $150,000 $150,000 $4,550,000 Technology and Equipment
Fire Station 3 Sprinklers $31,000 $31,000
14 City of
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FY
2026/27
FY
2027/28
FY
2028/29
FY
2029/30
FY
2030/31
5-Year
Total
Permit Information System $50,000 $50,000
Replacement VOIP Phone System for
Aging Mitel Connect $150,000 $50,000 $200,000
Technology and Equipment Total $231,000 $50,000 $0 $0 $0 $281,000 Transportation
ADA Transition Plan Implementation
(Public Right of Way) $500,000 $525,000 $1,025,000
Bikeway Study Policy $150,000 $150,000
Bridge Maintenance Program $710,000 $710,000
Median Islands Water Conservation
and Drought Tolerant Landscape Imp. $278,000 $278,000
Street Tree Services $465,438 $465,438
Water Conservation and Drought
Tolerant Landscaping $127,000 $127,000
Public Right-of-Way Standards
Update 300,000 300,000
Transportation Total $2,030,438 $0 $500,000 $525,000 $0 $3,055,438 Total General Fund CPR Funded
Projects $7,483,938 $3,739,500 $3,307,000 $1,197,000 $150,000 $15,877,138 Proposed CIP Capital Projects by Theme
Following are highlights of the capital projects included in the Proposed CIP by theme.

Administrative Facilities
The Administrative Facilities theme includes projects to preserve the function and operational efficiency of City facilities such as Fire Department facilities, 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 and accomplishments in the Administrative Facilities are detailed below.

General Obligation Bond Projects
This program includes several projects supported by the Measure I General Obligation Bonds, including the following that have funding in this CIP:
 Fire Station 5 Replacement
 Fire Station 7 Replacement
 Fire Training Tower Renovation
 Fire Station Security Upgrade
 Real Time Intelligence Center Feasibility
15 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R  Police Training Facility Feasibility and Assessment
 Police Drone First Responder Infrastructure
 Triton Museum Renovation
ADA Transition Plan Implementation (Public Buildings)
The City Council adopted the Americans with Disabilities Act (ADA) Self-Evaluation and Transition Plan in 2024 for public buildings, parks, and public rights-of-way. The Plan identified improvements to address barriers to accessibility, methods for improving access, and established timelines and costs for removing ADA barriers. This project will implement improvements at public buildings and sites as identified in the Plan.

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

Recent Accomplishments
 Substantially completed Phase II of the Stationary Standby Generators, which involved replacing four generators.
 Completed design for Phase III of the Stationary Standby Generators and will replace four emergency standby generators.  Completed the Upgrade Lighting to LED project at 32 City buildings. The project results in ongoing energy cost savings and reduces greenhouse gas emissions which is equivalent to 193 tons of waste being recycled instead of going to the landfill, 9,053 tree seedlings being grown over ten years, and reducing gasoline consumption by 61,609 gallons.
16 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Community Facilities
The Community Facilities 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.

General Obligation Bond Projects
This program includes several projects supported by the Measure I General Obligation Bonds, including the following that have funding in this CIP from the first tranche of projects:
 Renovation/Expansion of 3 Public Libraries
o Central Library Restrooms & Access Control Redesign
o Central Library Lighting Control System Replacement
o Central Library Entry Auto Door System Replacement
o Central, Mission, and Northside Libraries Renovation Design  Community ISC Aquatic Facility Renovation/Replacement o Community ISC Aquatic Facility (Phase 1) (funding in FY 2025/26) o Community ISC Aquatic Facility (Phase 2)
Central Park Library – Carpet Replacement
This project replaces the carpeting in the public areas of the Central Park Library. It addresses a key maintenance need in one of the City’s most heavily used public facilities, which welcomed 463,368 visitors in FY 2024/25. Given this high level of daily use, maintaining an attractive and welcoming environment is essential, and the carpet is a highly visible element that contributes to the library’s appearance.

Central Park Library – Repaint Interior
This project addresses essential maintenance of public spaces at the Central Park Library. The project focuses on patching and repainting public areas, as the existing paint is original to the building, more than 20 years old, and visibly worn and faded in many locations. The deteriorated paint detracts from the appearance of an otherwise vibrant and well-used facility. As a highly visible community space, this project is a priority to preserve the building’s appearance and extend its service life as a valued community asset.

Central Park Library
Central Park Library
17 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Recent Accomplishments
 International Swim Center (ISC) Renovation and Replacement – The project is currently in the pre-construction phase. The Notice to Proceed was issued on March 16, 2026. The City also provided the Soil Management Plan in early March to support the
contractor’s building permit application.
 Completed the project to replace the concrete sidewalk between handicapped parking and the front of Central Park Library in December 2025. The construction repaired the sinking and settling of the sidewalk, addressed drainage issues, and ensured ADA compliant access for the disabled community.

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. The City will determine the availability of funding to support capital projects based on annual net income generated in the Convention Center Enterprise Fund.

The Proposed CIP does not include any additional funding for the Convention Center. It is anticipated that a portion of the funding budgeted in FY 2025/26 will be carried over to FY 2026/27 to continue to complete various projects that are underway.

Recent Accomplishments
 Façade Improvements to Modernize Convention Center: Completed upgrades to the exterior façade of the Convention Center buildings. The project included a deep cleaning and power washing of the entire exterior façade areas, including the front entrance and the pyramid glass areas to remove visible dirt and grease built up. Following the deep cleaning, the front buildings were completed with a new fresh paint palette, stucco improvements, and work on the exterior columns.

18 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R  Interior Upgrades to Flooring: Completed the refresh of the Convention Center's front lobby terrazzo floor.

The improvements consisted of removing adhesive stains, floor striping and finishing with a new polished floor. In addition, interior upgrades included the deep cleaning and extraction of interior carpet areas in primary guest facing sections. This project restored the carpet to pristine conditions to refresh the areas.

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 (SVP), to be a progressive, service-oriented utility, which offers reliable and competitively priced services for the benefit of the City and its customers.

Projects in the Electric Utility theme are summarized below.

Enhancement Projects
Enhancement Projects consist of rebuilding, remodeling, renovating, and adding additional capacity or reliability capabilities. SVP plans to increase system capacity and reliability to the transmission and distribution system by completing several projects including: rebuilding and
replacing two receiving stations (Kifer Receiving Station and Scott Receiving Station), expanding the Northern
Receiving Station, adding feeders at Fairview Substation; constructing several 12kV undercrossings; upgrading the equipment at NRS to accommodate a third 230kV
Transmission Line coming into the facility; rebuilding
Agnew Substation and expanding Palm Substation to
support additional load growth; upgrading/reconfiguring the Northwest and South loops; and reconductoring the
Walsh to Uranium, Duane to Scott, and Northwest to Zeno substation lines. Projects in this category are funded using customer service charges, load development fees, developer contributions, proposed debt financing, and public benefits charges.

Major Maintenance Projects
Major Maintenance Projects include the upkeep of property or equipment. This work is performed on a scheduled basis and includes major engine overhauls at two power plants (Donald Von Raesfield [DVR] and Gianera), generation betterments, substation betterments, and miscellaneous street lighting projects. Distinct maintenance projects include the procurement of an additional spare engine at DVR and the development of a more resilient spare equipment program for high voltage transformers. At the Corporation Yard, SVP is repaving large sections of the grounds and continuing to pursue various facility improvement opportunities. Projects in this category are funded using customer service charges.
19 City of
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New construction projects include site preparation and construction for entirely new structures and/or significant extensions to existing structures. New business and fiber work is requested by current and prospective customers for expansion and various infrastructure repairs and modifications. SVP plans to reconstruct Homestead Substation which has been in service for over 45 years, construct a new distribution substation (Esperanca) to support additional load growth, build a new 115kV Transmission Line and a new 60kV Transmission Loop (Loop 1) between NRS and KRS, and construct six new customer dedicated substations - Laurelwood, San Tomas Junction, Stender Way Junction, Memorex Junction, Freedom Circle Junction, and Bowers Avenue Junction. The need for new substations is driven by ongoing development, with dedicated substations supporting the growing demands of expanding data centers and other large commercial facilities.

With the growing data center business, load growth is expected to increase due to higher customer demand.

This category is funded using a combination of developer contributions, load development fees, transfers from other funds, fiber revenue, and customer service charges depending on the nature of work.

Other Projects
This category includes unique projects that do not necessarily fit within the other categories, primarily consisting of new initiatives in the electric utility environment. These projects include carbon reduction through battery implementation and a utility scale battery energy storage system. SVP is partnering with several City departments to provide resiliency to their systems with battery backup generation during emergencies and opportunities to decrease operational and energy costs associated with diesel generator run-times. These projects are primarily funded using restricted revenues such as low carbon fuel revenue and public benefit funds. Overall, these innovative battery projects will be a showcase in supporting City operations and the business needs of the community.

Technology projects are also included in this
category. The Operations and Planning
Technology project includes installation of
several new software applications. The
remaining technology projects will support the
cybersecurity master plan as well as additional
workflow processing, monitoring, and network
infrastructure. Due to aging equipment and
several recent reliability issues in the
communications system, SVP has scheduled an assessment to evaluate the replacement of the Substation Control and Communication System. These projects are funded using customer service charges.

In addition, this category includes system impact studies to determine the feasibility of new projects connecting to the Bulk Electric System (BES). These projects are funded using developer contributions.

Recent Accomplishments
 Storm Water Compliance: Completed a storm water compliance project at the corporation yard in July 2024, with work including foundation installation, concrete slab pours, drainage improvements, and asphalt restoration. This project brings the facility into compliance with storm water regulations and best management practices and ensures long‑term protection of the storm drain system. 20 City of
Santa Clara
CMMS is used for
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Tasks Work-Requests \'.~:---=l..r
Audit&
Certification
Managing
Inventory
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R  Memorex Junction Substation was completed and energized in October 2024. This new substation provides 40 MVA of permanent electric service to a single customer.
 Electric Yard Buildings and Grounds: Completed general facility upgrades in August 2024, including a new
ADA-compliant women’s restroom with associated fire alarm modifications and a new HVAC system to improve climate
control for the computer and server room.
 Replace Balance of Plant Control System: Completed
upgrades to the Distributed Control System (DCS) at the Donald Von Raesfeld (DVR) power plant and the replacement of the DCS and Automatic Voltage Regulators (AVR) at the Gianera power plant in March 2025.

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

Related Santa Clara Project
The Related Santa Clara project, previously referred to as City Place, is envisioned to be an approximately 240- acre, multi-phased urban city development located in the heart of the Silicon Valley, in the northern part of the City of Santa Clara. The project will create a new center of activity for the community and region, providing significant mixed-use development on an urban scale, as well as accessible outdoor spaces and new infrastructure to support the development. This CIP includes funding for City staff and third-party contracts that support the project, offset by reimbursement from the Related Santa Clara.

Measure I General Obligation Bond Related Projects
On November 5, 2024, voters in the City of Santa Clara approved ballot Measure I, the Public Facilities and Infrastructure Bond Measure. This GO bond authorizes the issuance of $400 million to help address unfunded infrastructure needs. While an expenditure plan allocating these bond funds to various categories has been approved, there remain costs that are not eligible to be funded via the GO bond. These costs include bond project implementation and the furniture, fixtures, and equipment costs necessary for the operations of the facilities that are part of the approved GO bond expenditure plan. Funding has been set aside for these types of costs.

Recent Accomplishments
 Downtown Precise Plan: On December 5, 2023, the City of Santa Clara City Council certified an Environmental Impact Report (EIR) and adopted the Downtown Precise Plan and Form Based Zoning 21 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Code to implement the community’s vision and objectives for a vibrant, pedestrian-oriented destination Downtown with a mix of residential, office, and civic uses. Work has started on the associated infrastructure fee including identifying infrastructure items to be funded by an impact fee to equitably distribute the infrastructure costs within the Plan area. This is anticipated to be brought to City Council by the end of 2026.
 El Camino Real Specific Plan: A draft of the El Camino Real Specific Plan was previously considered by the City Council for adoption in 2021. The City Council did not take action on this Plan and directed City staff to modify the Plan to reduce residential density and maximum building heights. City staff, working with the Specific Plan consultant, and the community have completed the revisions to the Plan, which was brought to the Planning Commission on April 8, 2026 for a recommendation to the City Council for anticipated action on the adoption on May 19, 2026.
 Zoning Code Update: The City Council adopted an Updated Zoning Code in December 2023 and the first Zoning Code clean-up ordinance on August 20, 2024, which included the advisory that subsequent cleanup ordinances would be on the horizon. A second clean-up ordinance was adopted in June 2025. As an ongoing update, staff periodically brings clean-up ordinances to address clerical inconsistencies within the document or areas needing further clarification based on implementation of the new zoning code and to be consistent with State Law. The City is bringing forward its third “clean-up” ordinance for the Zoning Code Update to City Council in May 2026.

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. Trails projects serve a dual purpose of transportation (biking and walking) and recreational use.

It is important to note that projects funded by Quimby Act and Mitigation Fee Act revenues are programmed once those funds are received. The Parks and Trails and Community Facilities sections of this document describe the priorities for the use of those funds.

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

General Obligation Bond Projects
This program includes several projects supported by the Measure I General Obligation Bonds, including the following that have funding in this CIP from the first tranche of projects:
 Warburton Park Playground Renovations
 Henry Schmidt Park Playground Renovations (funding in FY 2025/26) 22 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Park Playground Rehabilitation
Playgrounds are designed to be accessible and serve
the needs of the entire community. Work continues as
funding becomes available to support the design and
construction phases on existing playground
rehabilitation projects. Funding sources include the park in-lieu fees, General Fund, and Measure I General
Obligation Bonds.

Identified and prioritized projects include the Maywood Park Playground Rehabilitation, Earl Carmichael Park
Playground Rehabilitation, Henry Schmidt Park
Playground Rehabilitation, Warburton Park Playground
Rehabilitation, and Mary Gomez Park Playground
Rehabilitation. The Henry Schmidt Park Playground
Rehabilitation is in the construction phase and will include the installation of new playground equipment and amenities to address population growth, new development, evolving recreational needs, and new regulatory requirements, while maintaining the park’s signature “Train” theme. The Warburton Park Playground Rehabilitation is currently at 95% complete in the design phase. The Department is also in the request for proposal (RFP) process to procure design firms for the remaining playground rehabilitation projects.

Park Improvements and Repairs
This project provides funding for the refurbishment, repair, or replacement of park assets and amenities, including sports courts, pathways, parking lots, signage, picnic areas, irrigation systems, restrooms, building exteriors and windows, sports turf, lighting, HVAC and electrical systems, roofs, and security systems. Specific projects are identified through park master planning efforts or as replacement needs arise and are implemented as funding becomes available.

Recent Accomplishments
The following developer-funded parks were completed during FY 2025/26:
 Calle Del Mundo Park: located at 2309 Calle Del Mundo, this project transformed 0.36 acres into a vibrant space featuring barbeque facilities, picnic areas, a walking loop with seating, a dedicated off-leash dog park with separate areas for large and small dogs, and a playground. The park was transferred to the City in September 2025.
 Calle De Lune Park: located at 2330 Calle De Luna, this one-acre park features colorful play equipment including slides, a climbing wall, and disc swings, as well as a walking loop with benches and a dedicated off-leash dog park, all designed to support active play, recreation, and community engagement.

The park was transferred to the City in May 2025.

Henry Schmidt Playground
23 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R  Gateway Crossing Park: located at 360 Brokaw Road, this is a dynamic and inclusive community destination that supports active recreation, social interaction, and relaxation for residents of all ages and abilities. The

2.1-acre park features a playground, a dedicated off-leash dog park, outdoor fitness equipment, an expansive lawn area, a walking loop, and picnic tables with integrated game boards. The park was transferred to the City in August 2025.

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 Clara Regional Wastewater Facility
This project funds the City of Santa Clara’s share of the 30-year CIP at the San José-Santa Clara Regional Wastewater Facility (RWF).

The City co-owns the RWF jointly with the City of San José. 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 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 are rated based on accepted industry ratings systems, namely the National Association of Sewer Service Companies (NASSCO) system. The most serious deficiencies are prioritized each year and are repaired under Sewer System Improvement CIP project.

Sanitary Sewer System Improvements
This project addresses high priority deficiencies identified through the condition assessments. In the first year of this CIP, this project funds the construction costs for lining a large sewer main under the Union Pacific Railroad tracks as well as costs for adjustments of sewer facilities in the public right-of-way required for public works projects.

Sanitary Sewer Capacity Improvements
This 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. 24 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Recent Accomplishments
 Awarded the 2024 Collection System of the Year – Medium Size from the California Water Environment Association (CWEA), the 3rd such award in the last 4 years.  Department completes approximately 170,000 linear feet of CCTV inspection of sewer infrastructure and approximately 500,000 linear feet of flushing/jetting annually.  Completed the Sanitary Sewer Master Plan in 2025.
 Continued to actively participate in TPAC including review, coordination, and oversight of capital projects at co-owned RWF.

Solid Waste
The projects in the Solid Waste category provide 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 District, CalRecycle, and Santa Clara County Department of Environmental Health.

Sanitary Landfill Development – Post Closure
This project funds monthly monitoring, data collection, reporting, and flare source test as required by the Regional Water Quality Control Board, Bay Area Air District, Cal Recycle, and Santa Clara County Department of Environmental Health. The project also funds maintenance and repairs to the landfill gas collection system, construction of monitoring wells, well abandonments, roadway and fence repairs, landscaping, mowing, burrowing animal abatement, and erosion and settlement repair as required.

Emergency Backup and Collection System Enhancements for Closed Landfill The Permit to Operate the landfill's methane gas control system issued by the Bay Area Air District (BAAD) requires continuous operation of a methane control device with an exemption of 240 hours per calendar year for maintenance or other unforeseen shutdowns. The Ameresco power plant currently serves as the primary methane gas control device and the City's flare facility serves as the secondary control device when the power generating facility is not operating. The power purchase agreement with Ameresco expires in December 2029, however, Ameresco has indicated intentions to terminate its lease and power purchase agreement early. The City’s flare facility will become the sole control device after power generation discontinues. This project will add resilience to the methane gas collection system and flare by installing backup power and gas collection improvements to maintain compliance with BAAD regulations.

Recent Accomplishments
 All mandated reports related to the closed landfill were submitted to regulatory agencies on time.  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.

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 25 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R 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.

General Obligation Bond Projects
This program includes several projects supported by the Measure I General Obligation Bonds, including the following that have funding in this CIP from the first tranche of projects:
 Bowers Ave Underpass SDPS Rehabilitation
 Green Storm Drain Design & Construction
 Storm Drain Renovations
 Storm Drain System Improvements
Anna Drive Neighborhood Flood Protection Project
The Anna Drive Neighborhood Flood Protection Project is identified as one of the high priority projects in the City’s Storm Drain Master Plan and consists of upsizing approximately 2,100 linear feet of storm drain pipelines ranging in diameters from 12-inch to 48-inch on Anna Drive between San Tomas Aquino Creek and McCormick Drive. The Anna Drive Neighborhood Flood Protection Project was allocated Federal Community Project Funding in FY 2024/25 in the amount of $3,000,000. Remaining FY 2025/26 funding will be carried forward to FY 2026/27.

Storm Drain Pump Station RTU Upgrade
The City Storm Drain Pump Stations utilize an RTU (Remote Terminal Unit) that communicates through radio frequency to the SCADA (supervisory control and data acquisition) application. This is an essential component of the pump stations and provides staff with critical information such as pump conditions, run times, and alarms status. The current RTUs are outdated and are soon to be no longer supported by the manufacturer. Updating the RTUs provides greater bandwidth capacity to communicate through fiber optic lines with radio frequency backup. The increased bandwidth allows for increased flexibility in the City’s ability to monitor and control operations at the Storm Drain Pump stations.

Green Storm Drain Design & Construction
The Municipal Regional Stormwater NPDES Permit issued by the State requires the City to fund green stormwater infrastructure (GSI) that will treat five acres of stormwater runoff by June 30, 2027. The first phase of the project was funded in FY 2024/25 and includes feasibility studies and development of plans and specifications for two project locations along Hope Drive and Lincoln Street from El Camino Real to Warburton Avenue. Design for these projects is underway.

Recent Accomplishments
 Completed construction of the Storm Drain Slide Gate Rehabilitation Project.  Successfully maintained all 21 storm drain pump and lift stations to manage stormwater runoff. 26 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Technology and Equipment
The capital projects in the Technology and Equipment category serve to increase efficiency, security, and functionality throughout the City.

Major projects in the Technology and Equipment program are detailed below.

GIS Enterprise System (Geospatial Information System)
This project provides 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.

Replacement VOIP Phone System for Aging Mitel Connect
The current VoIP platform is nearing end-of-life and is exhibiting increasing performance, reliability, and supportability issues. This project proposes evaluating, selecting, and implementing a modern cloud-based or hybrid VoIP/UCaaS solution to replace the existing system and ensure long-term communication stability.

Recent Accomplishments
 Implemented new Accela modules in the Fire Department  Expanded the Business License program to collect other types of revenue including the online submission of TOT, TID and CFD forms as well as the collection of Transient Occupancy Tax.  Implemented eSignature citywide. This first phase focused on various agreement types (Council and Non-Council).
 Launched the Qmatic customer service-based platform to better facilitate appointments and track customer wait times, foot traffic, and reasons for visits.

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.

General Obligation Bond Projects
This program includes several projects supported by the Measure I General Obligation Bonds, including the following that have funding in this CIP from the first tranche of projects:
 Street Resurfacing and Rehabilitation
 ADA Improvements
27 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R  Creek Trail Rehabilitation
 Bicycle Wayfinding
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 repairs include placing surface seals, replacement of curbs and gutters, as well as installation of roadway striping. This project is partially funded throughout the five-year CIP. The City’s current (Pavement Conditions Index) PCI is approximately 73 and is projected to increase to 74 and remain steady with the level of Transportation funding and General Obligation Bond funding included in this five-year CIP.

Uncontrolled Crosswalks Improvements Project
This project will enhance some of the approximately 200 uncontrolled crosswalks in Santa Clara. The project will determine if improvements are needed at existing crosswalks that do not contain traffic signals, beacons, or stop controls for vehicles. This project is partially funded.

El Camino Real Bike Lane Project
This project will install bicycle facilities along El Camino Real which is being coordinated with Caltrans and will be implemented in three phases. This project funds Phase I of the bicycle improvements including 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. The completion of bike improvements for the remaining segment of El Camino Real in Santa Clara (Phase III, from Lincoln Street to Portola Avenue) is currently unfunded. The project will also explore bike parking on El Camino Real per the Bicycle Master Plan.

Santa Clara Vision Zero
With the support of federal grant funds, the City developed a Santa Clara Vision Zero Action Plan through a robust community engagement process and comprehensive citywide safety analysis to identify the highest types, locations, severity, and demographics of collisions occurring within the City. The Plan developed a collision countermeasure toolbox and also recommends additional ongoing programmatic improvements such as enhanced education efforts and increased traffic enforcement. Additionally, a priority list of traffic safety improvements is included in the Plan. In March 2026, the City Council approved the Plan and included in this CIP is modest funding to support grant applications to implement improvements on a few of the high priority roadway corridors in the Plan.
28 City of
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Recent Accomplishments
 Completed preventative maintenance and rehabilitation for approximately 34 lane miles of street pavement in 2024 and 2025.
 Completed installation of rainbow crosswalk, a City Council Priority, at Monroe Street and Franklin Street to promote community inclusivity while maintaining compliance with roadway safety standards.  In February 2025, Class IV bicycle facilities were constructed on Mission College Boulevard from Great America Parkway to Montague Expressway.
 In March 2025, Central Transit Signal Priority (CTSP) was implemented at 23 signalized intersections along major Santa Clara transit corridors including Winchester Boulevard, Monroe Street, Lafayette Street, Brokaw Street, El Camino Real, and Stevens Creek Boulevard to improve transit travel time reliability along Valley Transportation Authority (VTA) Routes 22, 23, 60, 522, and 523.  Completed design work for the Lafayette Street Class IV Bikeway and Pavement Rehabilitation and Pruneridge Avenue Signal Timing Project.
 In FY 2025/26, began design of the Central Santa Clara Bicycle, Pedestrian, and Green Infrastructure project partially funded by the $9 million OBAG grant to build bicycle and pedestrian improvements within Central Santa Clara.
 In November 2025, implemented the 15 mph school zone speed limit program, reducing speeds on streets adjacent to schools to improve safety for students walking and biking.  Completed quick-build pedestrian safety improvements at the Winchester Boulevard and Dolores Avenue crosswalk, including enhanced signage, curb extensions, and a median refuge island to improve visibility and reduce crossing distances.
 Implemented the “Slow Down Santa Clara” program to promote safer driving speeds through community-based awareness
efforts, including distribution of yard signs to residents  Launched a Crosswalk Flags Program and installed pedestrian crossing flags at 30 locations citywide to increase driver awareness and enhance safety at marked crosswalks.
29 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Water and Recycled Water 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 300 service connections and 33 miles of distribution pipelines.

Major projects in the Water and Recycled Water Utilities program are detailed below.

Supervisory Control and Data Acquisition (SCADA) Improvements This project funds improvements and upgrades to the existing 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.

The project is also funding the deployment to a new fiber backbone during the five-year CIP as well as updates to the system as necessary.

New and Replacement Wells
This project funds the associated design, engineering, and construction management services for rehabilitating existing groundwater wells in the City as well as the installation of two new wells during the five-year CIP cycle. 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.

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 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 taking into account information about the age of water infrastructure, replacements can be targeted to the infrastructure in the worst condition. The Department completed a Sustainable Water Master Plan to forecast needs for future growth in the City and no major changes were recommended to the replacement schedule.

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 nonportable uses (such as irrigation, industrial processing, cooling towers, and toilet flushing) and supports the City’s overall sustainability strategy.

Currently, there are over 300 service connections and 33 miles of distribution pipelines. 30 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Recent Accomplishments
 Completed Sustainable Water Master Plan that forecasted water supply and distribution needs for future growth
 Updated the City’s Potable and Recycled Water System Rules and Regulations to align with regulatory changes
 Completion of negotiations with SFPUC related to Tier 2 Drought Allocations  Completed Phase 3 SCADA Improvements
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 $252.9 million that were itemized as part of this CIP process. These projects would rely primarily on funding from the General Fund Capital Projects Reserve.

Table 4: Unfunded CIP Projects by Theme
Theme Unfunded Projects
Administrative Facilities $28.3 M
Community Facilities $50.0 M
Convention Center $10.4 M
Other Community Projects $0.1 M
Parks and Trails $88.0 M
Storm Drain $21.6 M
Technology and Equipment $0.2 M
Transportation $54.3 M
Total Unfunded Projects $252.9 M
A listing of the unfunded projects by theme is included in the Budget Summary section of this document. This includes parks, outdoor spaces and trails; community parks and library facilities; streets and roads pavement; traffic safety and accessibility; and storm sewer system infrastructure.

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.  Parks and Recreation Master Plan Phase 1 (Years 1-5 in 2025 dollars) - $185 million to $260 million; new facilities planned for the later phases of the master plan  Library Facilities Master Plan – over $55 million for existing and new facilities (2025 dollars)  Vision Zero Action Plan - $350 million (2025 dollars) of capital improvements on the citywide high-injury network
 Storm Drain Master Plan - $290 million (in 2018 dollars) and the Storm Drain Pump Station Evaluation identified $3 million (2018 dollars) annually for pump station repair, maintenance and upgrades  Santa Clara Bicycle Plan Update 2018 - $39.3 million (in 2018 dollars)  Santa Clara Pedestrian Master Plan - $194.0 million (in 2019 dollars) 31 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R  Americans with Disabilities Act Self-Evaluation and Transition Plan (Draft) - $758.5 million (in 2024 dollars)
 Public buildings (e.g., new City Hall, existing City Hall, historic buildings, corporation yard) Operating Budget Impacts of Capital Projects

The table below summarizes the additional annual resources required to operate and maintain new facilities coming on-line during the out years of the CIP. The FY 2026/27 Budget includes operating and maintenance funds for facilities.

Table 5: Operating Budget Impacts by Theme
Theme 2026/27 2027/28 2028/29 2029/30 2030/31
Technology and Equipment 25,000 30,000 30,000 30,000
Transportation 27,003 44,413 46,145 47,954 49,847
Total Operating Budget
Impacts $27,003 $69,413 $76,145 $77,954 $79,847
It is important to note that there are some projects in the Proposed CIP with operating and maintenance costs that have yet to be identified as the projects are still in the assessment phase. This includes new police facilities funded by Measure I general obligation bonds. The cost of operating renovated or expanded facilities or infrastructure will be incorporated into the operating budget in the fiscal year assets become operational once those costs are identified.

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
The Proposed Budget includes updates to FY 2026/27 for all operating funds as reflected in the Source and Use Statements and described in the operating budget changes in the Appendix section of this document. This includes updated revenue and expenditure estimates for each fund.

In recent years, the General Fund position has improved due to strong revenue growth. In FY 2026/27, the General Fund budget is in balance and there is sufficient funding to set aside funds in a new Infrastructure Replacement Capital Fund, establish a Position Restorations Reserve to unfreeze positions that were frozen to address budget shortfalls in previous years, fund contributions to the Pension Stabilization Reserve, set aside funding for City Council priorities, and fund position changes to address organizational reviews and other needs.

Ten-Year Financial Forecast and Economic Outlook
The Ten-Year General Financial Forecast (Forecast) provides policy makers and the public with an updated assessment of the City’s fiscal health and 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 32 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R 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.

The Forecast, which is included in the Ten-Year General Fund Financial Forecast section of the document, compares anticipated ongoing General Fund revenues with 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 Forecast.

As shown in the table below, this Forecast shows a stable General Fund with small surpluses in most years. The FY 2026/27 budget is in balance at $377.2 million of funding sources and uses. In the remaining years, small surpluses and shortfalls range from -$1.9 million to $8.9 million equate to -0.5% to 1.7% of expenditures annually.

This reflects improvement from the last Forecast primarily due to stronger revenue growth.

Table 6: FY 2026/27 – FY 2035/36 Ten-Year General Fund Forecast ($ in millions)

2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 Funding
Sources $377.2 $385.4 $401.5 $415.7 $433.4 $449.1 $466.1 $484.2 $503.2 $523.9 Projected
Expenditures $377.2 $384.8 $403.4 $416.8 $432.7 $448.8 $464.6 $479.2 $497.6 $515.0 (Shortfall)/
Surplus $0.0 $0.6 ($1.9) ($1.1) $0.7 $0.3 $1.5 $5.0 $5.6 $8.9 % of
Expenses 0.0% 0.2% -0.5% -0.3% 0.2% 0.1% 0.3% 1.0% 1.1% 1.7% The Forecast compares ongoing revenues and expenditures to address the existing staffing and service levels.

It does not factor in the following:
 Costs to fully fund infrastructure needs;
 Costs to address growth in the City;
 Costs to add new services; and
 Costs to provide permanent funding for pilot programs.

While infrastructure needs are not fully met, there is progress in this area. Historically, the City has funded many capital infrastructure and equipment needs with one-time funds on a pay-as-you-go basis. The lack of sufficient one-time funding resulted in a backlog of unmet/deferred infrastructure needs. In November 2024, Santa Clara voters approved a $400 million General Obligation Bond to address the most critical needs. There remains a need for ongoing funding to replace the City’s infrastructure. The last Forecast began to address that need with modest funding starting at $1 million annually and growing throughout the forecast. This Forecast expands on that effort by setting aside an amount equivalent to three percent of General Fund expenditures into a capital infrastructure replacement fund.
33 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R With the improved Forecast, funding is also set aside to restore positions that were frozen in prior years to address budget shortfalls. These restorations would be considered in FY 2026/27 or during the development of the Proposed FY 2027/28 and FY 2028/29 Operating Budget in conjunction with departmental organizational reviews. In addition, the Forecast incorporates contributions to the Pension Stabilization Reserve.

The City has identified various risk factors that could have a potential impact on the Forecast. These include:
 Impacts of the Middle East conflict;
 Uncertainty regarding results of tariffs and other federal actions;  An economic downturn;
 State/federal legislative changes and legal challenges;  CalPERS actuarial changes or reform actions; and
 Unanticipated critical capital/infrastructure needs.

Economic Outlook
The Spring 2026 UCLA Anderson Forecast
pointed to economic growth approaching 3% in
2026. “After momentarily stuttering in 2025 in the
face of the highest tariff rates in a century, the U.S. economy is expected to resume a brisk pace of
nearly 3% GDP growth in 2026. This expansion is
fueled by significant fiscal stimulus, through
income tax cuts, looser financial conditions, and an
expanding boom in AI capital expenditures.

Supporting this growth in demand are the
continued gains in productivity observed since the
post-pandemic recovery. While the labor market is
projected to strengthen in response to rising
demand, restrictive immigration policies will
continue to limit its overall rate of expansion.”1
While the Spring 2026 UCLA Forecast projected
solid growth, recent developments have resulted in
greater economic uncertainty. Economists have pointed to a number of negative impacts associated with the Middle East conflict, including increased gas prices and inflation, lower consumer spending and economic growth, and significant financial market volatility. With the energy supply shock, this conflict is having a material impact on the global economy.

In the second estimate for the fourth quarter of 2025, the Gross Domestic Product (GDP) increased at an annual rate of 0.7%, following a GDP increase of 4.4% in the third quarter. The increase in real GDP primarily reflected increases in consumer spending and investments. These were offset by decreases in exports and government spending. Imports, which are a subtraction in the calculation of GDP, decreased.2 1 UCLA Anderson Forecast for the Nation, Spring 2026 Report: From Tariff Hikes to Income Tax Cuts, Clement Bohr 2 https://www.bea.gov/news/2026/gdp-second-estimate-4th-quarter-and-year-2025 U.S. Quarterly Real GDP Growth Forecast
(UCLA Spring 2026 Economic Forecast)
34 City of
Santa Clara
GDP Growth Forecast
5 ii" 4 <(
<(
!0-
'#- 3
i
A)
CI'.
£ 2
"' 1. e I ~
CL l
0 ~
A)
II/ 0 CI'.
- 1
Sources. Bure.au at Ec<>namic 4nalys!s. UClA Am;ierscn rarec.ast FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R The unemployment rates at the state, local, and national level have increased slightly over the last several years, with the rate for this region remaining consistently below the rate for the State and closer to the national level.

Property values in Santa Clara remain high. In 2025, the median price of a single-family home totaled $2.01 million, which was up from the 2024 level of $1.95 million as shown in the Single-Family Residential Home Sales chart. The number of closed sales also increased from 418 in 2024 to 441 in 2025. However, this sales volume remains below historical levels.

Unemployment Rate
(Not Seasonally Adjusted)
Dec.
2022
Dec.
2023
Dec.
2024
Dec.
2025
Nation 3.3% 3.5% 3.8% 4.1%
California 4.0% 4.9 5.1% 5.1%
San José-Sunnyvale-Santa Clara
Metropolitan Statistical Area 2.6% 3.9% 4.0% 4.0%
Source: Federal Reserve Economic Data
Data Source: Santa Clara County Association of Realtors 35 City of
Santa Clara
Real GOP, Percent Change From Preceding Quarter
$2,200,000
$2,000,000
$1 ,800,000
$1 ,600,000
$1 ,400,000
$1 ,200,000
$1 ,000,000
$800,000
$600,000
$400,000
$200,000
Seasonally adjusted annual rates

5.0 4.0

3.0 2.0

1.0 0.0
- 1.0
Q3
2024
GDP Gross domestic product
U.S. Bureau of Economic Analysis
Q4
City of Santa Clara
Single Family Residential Home Sales
11 11 111
-
Ql
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
■ Ave. Price ■ Med. Price
700
600
500
400
300
200
100
Q2 Q3
-
Q4
20 25
City of Santa Clara
Number of Single Family Closed Sales
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
I I
2025
■ # of Closed Sales
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R 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.

Amendments to the FY 2026/27 Adopted Operating Budget
The City Council approved the FY 2025/26 and 2026/27 Biennial Operating Budget in June 2025. While this year’s budget is focused on the capital budget, amendments to the FY 2026/27 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. With the improved General Fund Forecast, there are a number of service enhancements that are recommended for funding in FY 2026/27, including:
 $2.0 million in the General Fund for City Council priorities; the City Council will determine the use of these one-time funds.
 $1.0 million from the General Fund transferred to the Measure I Bond Projects Furniture, Fixtures and Equipment project in the General Government Capital Fund to cover project-related costs that are ineligible for bond proceeds.
 $10.4 million from the General Fund transferred to a new Infrastructure Replacement Capital Fund to replace capital assets that have reached the end of their useful life.  $3.0 million from the General Fund allocated to a Position Restorations Reserve to unfreeze positions that were frozen to address budget shortfalls in previous years.  $4.8 million from the General Fund allocated to the Pension Stabilization Reserve; this contribution is equivalent to one percent of the unfunded liability and is consistent with the targeted annual contribution set forth in the City’s Budget and Fiscal Policies.
 Position changes based on organizational reviews conducted for the Public Works and Parks and Recreation Departments to improve effectiveness and service delivery in those departments. Additional organizational reviews are underway and position changes are expected to be brought forward in FY 2026/27 and/or during the FY 2027/28 and FY 2028/29 Proposed Operating Budget process. Additional positions are recommended to address specific needs as described below.

The 2026/27 Proposed Budget reflects an increase of 30.25 positions from the 2026/27 Budget approved in June 2025 as detailed in the Budgeted Positions section of this document. This includes a net 6.0 positions that were added during FY 2025/26 after the adoption of the budget (1.0 position added through Report to Council 25-773,

3.0 positions added through Report to Council 25-725, and a net 2.0 positions added through Report to Council 26-249) and 24.25 positions proposed in this budget.

The net 6.0 positions previously added during FY 2025/26 are summarized below.  Community Development Department (2.0 FTE): addition of 1.0 Communications Coordinator, 1.0 Business Analyst position, and 1.0 Senior Planner position; deletion of 1.0 Staff Analyst II.  Electric Utility Department (4.0 FTE): addition of 1.0 Electric Program Manager position, 1.0 Senior Electric Utility Engineer position, 1.0 Electric Utility Engineer position, and 1.0 Management Analyst position.
36 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R A net 24.25 positions are recommended as part of the FY 2026/27 and FY 2027/28 Proposed Capital Improvement Program Budget as described below.
 City Manager’s Office/Non-Departmental (3.0 FTE): add 1.0 Senior Management Analyst position to support small businesses including providing assistance through the development process, partially supported by the Building Development Services Fund. Unfreeze 1.0 Senior Management Analyst position to provide analytical and administrative support. Reallocate 1.0 Management Analyst from the Public Works Department to Non-Departmental to support the Measure I general obligation bond implementation.
 Electric Utility Department (-12.0 FTE): add 1.0 Electric Program Manager position and 1.0 Staff Aide II position to support the Public Benefits Program, 1.0 Management Analyst position to support the engineering function, and 1.0 Key Customer Service Representative position to support the Key Accounts team. Additionally, reallocate 16.0 positions from the Electric Utility Department to the Finance Department to reflect an updated organizational structure under which the Business Services Division is moved to the Finance Department.
 Finance Department (17.0 FTE): add 1.0 Management Analyst position, funded by the Electric Utility Fund, to support the SVP Business Services Division. Additionally, reallocate 16.0 positions to the Finance Department from the Electric Utility Department to reflect an updated organizational structure.  Human Resources Department (4.0 FTE): add 2.0 Management Analyst positions to support safety and wellness, 1.0 Management Analyst position to support SVP (funded by the Electric Utility Fund), and 1.0 Human Resources Technician position to assist with recruitment efforts.  Library Department (0.25 FTE): Increase 0.25 FTE of an existing Office Specialist II position (from 0.75 to 1.0 FTE) to support Library Department administration.  Parks and Recreation Department (6.0 FTE): as a result of an organizational review, add 1.0 Assistant Director of Parks & Recreation position, 1.0 Division Manager position, 1.0 Parks Construction, Maintenance & Repair Manager position, 2.0 Recreation Coordinator positions, 3.0 Office Assistant positions, 1.0 Management Analyst position in the Parks & Recreation Department. These additions are partially offset by recommended deletions of 1.0 Deputy Parks & Recreation Director position, 1.0 Recreation Manager position, and 1.0 Park Maintenance Crafts Worker position.  Public Work Department (6.0 FTE): As a result of an organizational review, add 1.0 Assistant Director position, 1.0 Division Manager position, 2.0 Senior Engineer (Civil) positions, 1.0 Associate Engineer position, 2.0 Automotive Technician I positions (with a two-year term limit), and 1.0 Assistant Engineer (restore previously frozen position) in the Department of Public Works. These position additions are partially offset by a recommended deletion of 1.0 Deputy Director position. Additionally, a reallocation of

1.0 Management Analyst position from the Department of Public Works to Non-Departmental is recommended to reflect the shift of the position that supports the Measure I general obligation bond implementation.

The detailed amendments to the FY 2026/27 Operating Budget by fund can be found in the Appendices section of this document.
37 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S MIT T AL L E T T E R Stadium Authority
The Stadium Authority 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 2026/27 Operating, Debt and Capital Budget was adopted by the Stadium Authority Board on March 10, 2026 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 budget, 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 Proposed Fiscal Year 2026/27 and 2027/28 Biennial Capital Budget is consistent with the City’s mission and appropriates resources to address the highest priority capital infrastructure needs. With the voter approval of Measure I in November 2024, the City will be focusing on delivering the $400 million in authorized capital projects over the next decade. This CIP includes funding of $63.2 million from the first tranche of projects, with the second and third tranches to be incorporated into future CIPs. With these funds, the City will address many critical infrastructure needs. However, a funding gap remains and unfunded projects identified in this budget total $252.9 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 that total over $1 billion. The City will continue to work on strategies to address this funding gap.

The Proposed Budget also includes updates to the FY 2026/27 Operating Budget that was adopted in June 2025. Based on the improved Ten-Year General Fund Forecast, there are additional investments factored into the budget, including funding for City Council priorities, the establishment of a new Infrastructure Replacement Capital Fund, contributions to the Pension Stabilization Reserve and the Measure I Bond Projects Furniture, Fixtures and Equipment project, as well as recommended position additions tied to organizational reviews conducted for the Public Works and Parks and Recreation Department and other specific needs. With these funds, the City will continue to deliver a high level of service to the residents and businesses in Santa Clara, including supporting day-to-day operations and supporting the upcoming FIFA special events within the City.

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.

In closing, I want to thank the City Council for our continued strong partnership in supporting vital City services while also ensuring the fiscal health of the City. It is through this strong partnership that we continue to provide a wide range of public services that our community enjoys.

Respectfully submitted,

Jōvan Grogan Kenn Lee
City Manager Director of Finance

38 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y A T A G L AN C E

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 technological 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 the Ohlone 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 18.28 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 13th largest city in the U.S., and the wider nine-county San Francisco Bay Area.

Population1
The 2025 population of the City of Santa Clara is estimated at 134,587 and is one of the most diverse in the nation with about 46% of residents born outside the U.S. The City’s residents are highly skilled and educated, with approximately 66% of adults holding a bachelor’s degree or higher. The median age is 34.6 years, and the median household income is reported at
$178,958.
39 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y A T A G L AN C E Business1
Businesses in City of Santa Clara range from entrepreneurial start-ups to longstanding family-owned firms and 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, Intel Corporation, Kaiser Foundation Health Plan, and Nvidia Corp.

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, 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.

Housing1
There are approximately 48,601 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. As of February 2026, the median price of a single-family home was $2,065,000, and the average rent for a one-bedroom apartment was $3,211. Santa Clara has invested millions of dollars in affordable housing projects and oversees long term affordability compliance for 6,399 rental units for seniors, families, homeless and disabled residents.

Transportation
In addition to approximately 590 lane miles of City-owned roadways, Santa Clara is crisscrossed by State Highway 101 and El Camino Real (Highway 82) and two regional County of Santa Clara expressways. Public transit services in the City include Santa Clara Valley Transportation Authority buses and light rail, Caltrain, Altamont Corridor Express (ACE), Capitol Corridor, and Amtrak. A future extension of BART into the South Bay is underway and will terminate in Santa Clara, and the Norman Y. Mineta San José International Airport borders the City. In late 2023, Santa Clara partnered with the City of Cupertino and launched a multi-year public ondemand electric vehicle rideshare service, also known as Silicon Valley Hopper. Phase I of the service covers southern Santa Clara, and in the fall of 2026, Phase II will expand the service area to include all areas north of the railroad tracks, providing service to the entire city. Santa Clara has also placed a priority on enhancing multimodal transportation and improving transportation accessibility and safety for residents and businesses. Several 40 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y A T A G L AN C E plans have been approved to help guide these efforts that include the Bicycle Master Plan, Pedestrian Master Plan, ADA Self-evaluation and Transition Plan, and the Vision Zero Action Plan. The City is also in the process of completing a Creek Trail Network Expansion Masterplan for future expansion of trail facilities to complement the existing San Tomas Aquino Creek Trail.

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 twoyear degree or professional development. Santa Clara University, the oldest institution of higher learning in California, is in the historic Downtown Quad area of the City and enrolls 6,115 undergraduate students and 3,063 graduate students.

Infrastructure
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 Cityowned 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. 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 JoséSanta Clara Regional Wastewater Facility and is investing approximately $186 million over the next 10 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. The Water & Sewer Utilities also received the Clean Water Environment Association’s Collection System of the Year 2024 award for medium-sized utility in the wastewater field.
41 City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y A T A G L AN C E 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 several housing, mixed-use, and commercial/ industrial projects:
 3065 Bowers Avenue received an Architectural
Review permit to allow for the development of a
101,171 square foot Manufacturing Building and
Central Utility Building for Intel;
 2290 de la Cruz Boulevard received an Architectural
Review permit to allow for the development of a onestory 11,100 Square-Foot prefabricated steel building;  2303 Gianera Street received an Architectural Review
permit to allow for the development of eight semi-attached single-family residences;  4249 Cheeney Street received an Architectural Review permit to allow for the development of nine two-story townhouses;
 2400 Condensa Street received an Architectural Review permit to allow for the development of a 345,475 Square-Foot Office Building, 2,737 Space Parking Structure, and a Pedestrian Bridge; and  1400 Coleman Avenue received an Architectural Review permit to allow for the development of 142 four-story townhome units.

In addition to projects receiving planning approval, 1,240 residential units were constructed in FY 2025/26 in five multifamily residential buildings.

More information on new development projects can be found on the City’s website https://www.santaclaraca.gov/business-development under the “Development Projects” link. 1 California Department of Finance Demographic Research Unit; January 2024 and January 2025 City Population Table US Census QuickFacts, July 1, 2025
Santa Clara County Association of Realtors Market Housing Statistics March 2026 Santa Clara University 2025-2026 Undergraduate Bulletin Rentcafe.com – Average Market Trends as of March 23, 2026 Employment Development Department, Major Employers in California Data USA Santa Clara
42 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y A T A G L AN C E 43 City of
Santa Clara
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y A T A G L AN C E 44 City of
Santa Clara
Community Profile1
Geography
Persons per Square Mile
Santa Clara: 6,984
county: 1,500
Population
Santa Clara County
Age
Santa Clara
Median Age

34.6 years
Age 18-64:
78%
1,922,259
County
Median Age

38. years
Age 18-64:
76%
Foreign IBorn
Santa Clara: 46%
County: 42%
Median Family Income
Santa Clara
$178,958
County
$164281
Land in Square Miles
Santa Clara: 18.28
County: 1,291
Diversity
City of Santa .C Iara ■ Coun ty of Santa C Iara
3%.
27% 27%. 25%
16%
Asian White Hispanic American African
Indian, American
Pacific
Islander or
mixed race
Education
High School Graduate or Higher
Santa Clara
94%
County
89%
Bachelor's Degree or Higher
Santa Clara County
66% 57%
Labor Market
Labor Force
Santa Clara: 78,400
County: 1,03 ,500
Unemployment Rate
Santa Clara: 3.4%
County: 4.0c/o
1US Census Q:JickFacts July 2025; CA EDD - Laror Marxet /ofo as of March 2026; CA Dept of F~iance Demographic ReseardJ Uoit; Data USA Santa Claro
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | S A NT A C LA RA C O MP A R I S O N T O OT H E R

L O C A L C IT IE S

SANTA CLARA COMPARISON

TO OTHER LOCAL CITIES IN THE LOCAL REGION
The following graphs compare FY 2025/26 per capita revenues from key sources and total budgeted expenditures for FY 2025/26 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 2025/26. The assets per capita for FY 2024/25 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.

Source: City of Milpitas FY 2025/26 Adopted Budget
$0
$200
$400
$600
$800
$1,000
$1,200
FY 2025/26 Property Tax Per Capita
45 City of
Santa Clara
I I
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | S A NT A C LA RA C O MP A R I S O N T O OT H E R

L O C A L C IT IE S
Source: City of Milpitas FY 2021/22 Adopted Budget
$0
$100
$200
$300
$400
$500
$600
$700
FY 2025/26 Sales Tax Per Capita
Source: City of Milpitas FY 2025/26 Adopted Budget
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
FY 2025/26 Transient Occupancy Tax Per Capita
Source: City of Milpitas FY 2025/26 Adopted Budget
46 City of
Santa Clara
I I I
- - - -I I I I I I
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | S A NT A C LA RA C O MP A R I S O N T O OT H E R

L O C A L C IT IE S
Source: Each city’s FY 2025/26 Adopted Budget
Source: Each city’s FY 2025/26 Adopted Budget
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
FY 2025/26 General Fund Revenue per Capita
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
FY 2025/26 General Fund Expenditures per Capita
47 City of
Santa Clara
1 I I I I I I I
1 I I I I I I I
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | S A NT A C LA RA C O MP A R I S O N T O OT H E R

L O C A L C IT IE S
Note: For Budget (All Funds) and Assets tables, the budgets for Santa Clara and Palo Alto include City-owned utilities that account for a significant portion of the budget.

Source: Each city’s FY 2025/26 Adopted Budget
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
FY 2025/26 Budget (All Funds) per Capita
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
FY 2024/25 Assets per Capita
Source: Each city’s FY 2024/25 Annual Comprehensive Financial Report with the exception of the City of Hayward, FY 2023/24 Annual Comprehensive Financial Report 48 City of
Santa Clara
■
■
■ I
I I

I I I I I I

I I I I I
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | R OS T E R A ND MA N A GE ME N T T E A M Roster of City Council and Commission Members*
City Council
Mayor Lisa M. Gillmor
Vice Mayor, Councilmember District 1 Albert Gonzalez
Councilmember District 2 Raj Chahal
Councilmember District 3 Karen Hardy
Councilmember District 4 Kevin Park
Councilmember District 5 Sudhanshu “Suds” Jain
Councilmember District 6 Kelly G. Cox
Board of Library Trustees Civil Service Commission
Jonathon Evans
Daniel Huynh
G. Salim Mohammed
Debbie Tryforos
Stephen Ricossa
Samuel Pumarejo
Arti Purohit
Ron Billingsley
Franklin J. Felizardo
Wesley Dudzinski
Cultural Commission Historical and Landmarks Commission Debra von Huene
Candida Diaz
Neetu Garg
Charles Pontious
Louis Samara
Kuku Das
Abinas Roy
Patricia Leung
Ed Stocks
Michael Celso
Yvonne Inciarte
Kathleen Romano
Ana Vargas-Smith
Kaushal Varshney
Parks and Recreation Commission Planning Commission
Dana Caldwell
Maureen Reilly Chu
Derek DeMarco
Eversley Forte
Vikas Gupta
Edward Souza
Eric Crutchlow
Mario Bouza
Priya Cherukuru
Lance Saleme
Qian Huang
Nancy A. Biagini
Yashraj Bhatnagar
Salary Setting Commission Senior Advisory Commission
David Kertes
John Sontag
Mihir Kakkad
MV Kumar
Rick Andrews
Kris Kishhor Kapadia
Maria Vaz
Rebecca J. Seldon
Alma Soto
Youth Commission
Julianna Arias
Allysa Domensino
Namita Gaidhani
Srikha Gopisetti
Neha Israni
Rebecca Kunze
Malia Martin
Samaira Mehta
Brian Rong
Samarth Suresh
Mateo Espinal
Niharika Uppalapati
Drew Madriaga
Seoyun Chong
Aneesha Vemu
Ayaan Mathur
Ibrahim Rayees
*As of April 2026
49 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | R OS T E R A ND MA N A GE ME N T T E A M *As of April 2026
Executive Management Team*
City Manager
Jōvan D. Grogan
City Attorney City Auditor
Glen Googins Vacant
City Clerk Assistant City Manager
Bob O’Keefe Aracely Azevedo
Assistant City Manager Assistant City Manager
Vacant
Assistant City Manager (Limit-Dated)
Paulina Morales
Elizabeth Klotz
Fire Chief
Ruben Torres
Chief of Police Director of Finance
Cory Morgan Kenn Lee
Director of Human Resources Director of Information Technology Marco Mercado (interim) Adam Kostrzak
Director of Parks and Recreation Chief Electric Utility Officer Damon Sparacino Nico Procos
City Librarian Director of Public Works
Patty Wong Craig Mobeck
Director of Water and Sewer Utilities
John Ramirez
Director of Economic Development &
Sustainability
Reena Brilliot
Director of Community Development
Afshan Hamid
50 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y O R GA N I Z AT I ON C HA R T

CITY ORGANIZATION CHART
Chief of Police (Elected) Mayor and Council City Clerk (Elected) Boards and
Commissions
Finance
Electric Utility
Community
Development
Police City Clerk’s Office
City Departments
City Attorney City Manager City Auditor
Electorate
Fire
Human Resources
Public Works
Parks and Recreation
Library
Water and Sewer
Utilities
Information Technology
51 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y O R GA N I Z AT I ON C HA R T 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
52 -------,
~
-------,
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y O R GA N I Z AT I ON C HA R T Electric Utility Department *
Administrative and Business Services
1316 – Administrative Services
Engineering and Project Management
1361 – Engineering
Resource Planning and Engagement
1312 – Public Benefits
1313 – Key Accounts
1315 – LCRE Program
1317 – Fiber Program
1319 – Electric Vehicle Program
1325 – Greenhouse Gas Program
1356 – Resource Management
1358 – Risk Management and Settlements
Revenue and Resources
1321 – Revenues and Resources Costs
1326 – Resource and Production
Utility Operations
1324 – Utility Compliance
1351 – Systems Support
1362 – Power System Controls
1371 – Metering
1372 – Substation
1376 – Transmission & Distribution
1377 – Generation

* Program 1311 – Financial Services has been moved
from the Electric Utility Department to the Finance
Department under SVP Business Services.

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
SVP Business Services
3211 – Purchasing - Electric
3221 – Business Services - Electric
Fire Department
Administration
7811 – Administration
7812 – Special Operations
Community Risk Reduction
7831 – Administration / Investigation /
Education
7834 – Development Services
7835 – Non-Development Services
7836 – Development CUPA
7837 – Non-Development CUPA
Emergency Medical Services
7861 – Emergency Medical Services
Field Operations
7822 – Emergency Response
Training
7841 – Training – Fire
53 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y O R GA N I Z AT I ON C HA R T 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
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
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
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 – Youth Sports
1147 – Aquatics
1148 – Sports and Athletics
1149 – Youth and Teen Center
Senior Nutrition Program
1112 – Senior Nutrition Program
54 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y O R GA N I Z AT I ON C HA R T Police Department
Administrative Services
7742 – Administration
7744 – Professional Standard
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
7765 – Reserves
Investigations
7732 – General Investigation
7733 – Special Enforcement Team
7734 – Records
Special Operations
7761 – Special Operations General
7764 – Special Operations – Specialized
Teams
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
Department of Public Works
Engineering – Land and Property
Development
4451 – Land and Property Development –
General Services
4452 – 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
55 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IT Y O R GA N I Z AT I ON C HA R T 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, Compliance, Conservation
1411 – Administrative Design
1412 – Water Quality
1413 – Water Resources
Non-Departmental
Citywide Programs
3611 – Citywide Programs
8011 – Sports and Open Space Authority
8014 – Santa Clara Convention Center
Citywide Strategic Programs & Initiatives
3631 – Citywide Strategic Programs &
Initiatives
3632 – Office of Emergency Management
Stadium Operations
3621 – Stadium – General Administration
3622 – Stadium – Police
3623 – Stadium – Fire
3624 – Stadium – Public Works
3625 – Stadium – Information Technology
56 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T A ND FI S C A L P O L I CI E S

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 the 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.

Biennial Budget Cycle
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 for approval. While in a year when the biennial operating budget is brought forward, adjustments to the Year 2 capital budget appropriations will be presented to the City Council for approval. In addition, all capital and operating source and use statements are incorporated into the budget every year for adoption. Appropriations are adopted on an annual basis.

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 Section 802(e) that requires the City Manager to keep the City Council advised of the financial condition and 57 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T A ND FI S C A L P O L I CI E S 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 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 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 separately 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 fiveyear 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 – 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). 58 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T A ND FI S C A L P O L I CI E S  Capital Projects Reserve – is used to support the City’s CIP, including providing funds for new and existing infrastructure as well as addressing capital maintenance and unanticipated needs. The minimum target is $5.0 million with the goal of having sufficient funds to fund capital projects included in the City’s biennial capital budget and five-year CIP. This reserve shall be used in conjunction with the Infrastructure Replacement Capital Fund that serves as a sinking fund, tentatively established at 3% of General Fund expenditures, to replace the City’s existing infrastructure that has reached the end of its useful life.  Land Sale Reserve – this reserve allocates proceeds from the sale of City-owned land.  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 Rate 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 utility’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. 59 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T A ND FI S C A L P O L I CI E S 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.

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 any outstanding loans is included in the City's Annual Comprehensive Financial Report and Biennial Budget. In addition, advances from the General Fund that have been approved by the City Council 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 maximum security while meeting the daily cash flow demands of the City and providing the highest investment return 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 by settlement date. 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.
60 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T A ND FI S C A L P O L I CI E S 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 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 allocation 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-first 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 events 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 application 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. 61 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T A ND FI S C A L P O L I CI E S Stadium Authority Policy
The Stadium Authority 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 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/financialreports. This budget reflects the revenues and expenditures related to the support of the Stadium and can also be found in the General Fund Non-Departmental 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.
62 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE

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 balance 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 63 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE new projects. These are then submitted to the Department of Public Works (DPW) and Finance Department in August/September for review.

2. In the August/September timeframe, the City Manager’s Office and 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, the DPW begins their review, working with the respective departments to refine details and scope. This allows DPW to develop accurate budget estimates for each project. These project estimates are submitted back to departments in October.

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, and DPW. These final project requests are due to the Finance Department in November. Requested adjustments to Departments’ base budgets are also submitted to Finance for review during this time.

5. In the November/December timeframe, 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.

6. Between January and February, 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, base change requests, as well as operating requests.

7. At the end of January or beginning of February, the Ten-Year General Fund Financial Forecast is developed. The forecast provides context for the upcoming budget process.

8. 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.

9. 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.

10. Study sessions and a public hearing 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 the City Clerk at least ten days prior to the public hearing.

11. The budget is legally enacted through passage of a minute order. 64 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE 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.

Details of Budget Book
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 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 General Obligation Bond Summary section provides background information and the expenditure plan on the voter-approved Measure I bond. This includes details on the bond projects included in the CIP.

The Budgeted Positions section details the City’s budgeted positions by department and by fund as well as reconciles year-over-year changes. This section also includes a list of frozen positions by department.

The Debt Service section details the City’s debt policies, long-term debt obligations, legal debt margin, the ten-year debt service schedule for all outstanding debt issuances, and the statements of sources and uses of funds for the debt service funds.

The Ten-Year General Fund Financial Forecast section compares anticipated General Fund revenues with base expenditures, which include the projected cost of providing the current level of service. The Forecast serves as a strategic planning tool to assist the City Council, staff and the public 65 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE with decision making as they work to adopt the budget and consider the long-term financial strategies for the City.

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 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 fiveyear CIP budget.

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

The Indices section includes a capital project index by theme and a capital project index by department.

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

Construction – Includes 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 – Includes 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. 66 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE 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.

Retirement and Benefits – Includes CalPERS retirement costs, health benefits, Medicare, social security, and other post-employment benefits (OPEB). 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.

Resource and Production – Consists mainly of costs related to the purchasing or generating 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 Office, 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 includes 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 vehicle maintenance 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. 67 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE 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)
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 are 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 68 ◄
a

I I I I
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE Capital Budget Reader’s Guide
The Capital Improvement 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. 69 City of
Santa Clara
FUNDED 6 39 - RE AIR TO H STO IC BU LOI GS
Project Number:

Year Initiated:

Planned Completion Year:

Project Type:

Strategic Pillar
Location
6139 Theme I Category: Administrative
Facilities
2011 Project Manager: Ken Winland
Ongoing Department: Public Works
Ongoing Fund: 538 - Public Buildings
.,._ 02 - Deliver and Enhance High Quality Efficient
l!.U Services and Infrastructure
Historic Buildings (Harris Lass House, Headen Inman House, Jamison Brown House, Berryessa Adobe)
Project Description This project includes the repair and maintenance of the City-owned historic bulldlhgs. These buildings lnclude Headen-Inman, Jamison Brown, Harris Lass and Berryessa Adobe. R·epalrs include painting, plumbing, exterior maintenance, electrical, etc.

Funding Sources
Funding Sources
Total Sources
Expenditures
Construction
Contingencies/Misc
Engineering
Transfers Out
Total Expenditures
Operating Impacts
General Fund - Capital Project Reserves, and Potential Grant Funding (1)
All Prior
Actuals
$1,062,689
All Prior
Actuals
$967,588
$8,250
$86,851
$1 ,062,689
(2)
2025/26
$268,333
2025/26
$114,242
$154,091
$268,333
(3)
2026/27
$125,000
2026/27
$125,000
$125,000
(3)
2027/28
$125,000
2027/28
$125,000
$125,000
(4)
2028/29
2028/29
(4)
2029/30
2029/30
(1) All Prior Actuals reflect the cumulative actual sources and expenditures since project inception, (2) Project sources and expenditures for 2025/26 include carryover from the prior year. (4)
2030/31
2030/31
(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 bud.gets, (5)
Total
$1 ,581 ,022
Total
$1 ,331 ,830
$8,250
$154,091
$86,851
$1 ,581,022
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE

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.

UNFUNDED PROJECTS ADMINISTRATIVE FACILITIES
6123 - Public Building Parking Lot Improvements
FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 Five-Year CIP Total - - $1,564,000 $2,932,500 $1,092,500 $5,589,000 The unfunded project reflects deferred preventative maintenance and rehabilitation needs at various City owned public parking lots that would be required to improve the pavement to be considered in a state of good repair.
70 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T GU I DE 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 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 2025/26 Estimate, the FY 2026/27 and FY 2027/28 Proposed, the FY 2028/29 through FY 2030/31 CIP, and the Five-Year CIP Total.

The operating budget funds are comprised of the General, Special Revenue, Debt Service, Enterprise, Internal Service, and Other Agency Funds. The financial statements for this group of funds includes the FY 2024/25 Actual, FY 2025/26 Amended Budget, FY 2025/26 Estimate, FY 2026/27 Adopted Budget, and FY 2026/27 Amended Budget. The FY 2025/26 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 2025/26. The FY 2026/27 Amended Budget column reflects amendments to the FY 2026/27 Adopted Budget that are described in the Appendices section of this document.
71 B UD G E T C A LE N DA R | FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T BUDGET CALENDAR - October
November
December -
June June - May April April - March February January
Departments
Submit Base
Requests
Department
Meetings with
the Capital
Project Review
Committee and
City Manager's
Office
Review of
Proposed CIP
with City
Manager's
Office
Department
Review and Edit
CIP Budget
Book Pages
Study Session
on Proposed FY
2026/27
Municipal Fee
Schedule
Study Sessions
on FY 2026/27
and FY 2027/28
Proposed CIP
Budget and
FY 2026/27
Operating
Changes
Public Hearing
and Adoption of
FY 2026/27 and
FY 2027/28
Proposed CIP
Budget and
FY 2026/27
Operating
Changes
Departments
Submit CIP
Project
Requests
City Manager's
Office and
Finance
Department
Review of
Operating Base
Budget
Statements of
Sources and
Uses of Funds
Reviewed by
Departments
Finalize
Operating and
CIP Proposals
and Proposed
Budget
Finalize FY
2026/27
Municipal Fee
Schedule
Public Hearing
and Adoption of
FY 2026/27
Municipal Fee
Schedule
Departments
Submit Critical
Changes to the
Operating
Budget
City Manager's
Office and
Finance
Department
Review of
Operating
Budget
Proposals
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T P RI N C IP L E S BUDGET PRINCIPLES FOR FY 2026/27

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.

4. When considering budget augmentations and service restorations, factor in the long-term ability to support the additions and the potential community and organizational disruption if funding is not available in the future.

5. Focus on fiscal sustainability efforts that better position the City long-term.

6. Focus on projects and services that benefit the community as a whole.

7. Pursue economic development objectives and strategies to foster new public and private investment within Santa Clara, and to create employment opportunities.

8. Balance between compensation adjustments to retain and attract employees and funding for positions.

9. 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.

10. 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.

11. 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.

12. 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).

13. Explore expanding existing revenue sources and/or adding new revenue sources to address targeted needs.

14. Engage employees to contribute their ideas and expertise to the budget development process and inform employees on the content of the budget and priorities for the upcoming year.

15. Use the General Plan as a primary long-term fiscal planning tool and link the ability to provide City services to development policy decisions.
73 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y

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.

Annual Comprehensive Financial Report (ACFR) - 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.

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).
74 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y 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.

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 & Poor’s Financial Services LLC, 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. 75 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y 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.

Capital Asset - Land, buildings, equipment, improvements to buildings, and infrastructure (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, facilities, or major renovations of the 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 method 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.).

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.
76 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y Council Priority Setting Session – annual meeting of the City Council to formulate the City Council’s priorities and initiatives and establish Priority Areas of Focus and key initiatives for the City organization.

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 borrowing 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.
77 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y Equity - The net assets of a fund (i.e. the assets less the liabilities on a fund balance sheet).

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).
78 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y 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. 79 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y Legal Debt Limit - Per section 1309 of the City Charter, bonded indebtedness of the City may not exceed 15% of the total assessed valuation of property within the City, exclusive of any indebtedness incurred for the purpose of water supply, sewers, storm drains, or electric.

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, special 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 governmental 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.

80 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y 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 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 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 9.125%. 81 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y 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. Enhance Community Engagement and Transparency; 2. Deliver and Enhance High Quality Efficient Services and Infrastructure; 3.

Enhance Community Sports, Recreational and Arts Assets; 4. Promote and Enhance Economic, Housing and Transportation Development; 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 Clara - 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 nonhousing 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.

82 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | G L O S S A R Y 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 Drain, 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 13.5%.

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. 83 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | A CR O N Y MS

ACRONYMS
AB Assembly Bill
ACFR Annual Comprehensive Financial Report
ADA Americans with Disabilities Act
AIPG All Inclusive Playground Grant
ALS Advanced Life Support
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
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
84 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | A CR O N Y MS CRC Community Recreation Center
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
85 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | A CR O N Y MS GWh Giga Watt Hour
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
86 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | A CR O N Y MS PCA Property Condition Assessment
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
87 FY 2 0 2 6 / 2 7 A ND FY 2 0 2 7/ 2 8 P R O P O S E D C A P IT A L I M P R O V E M E NT P R O GR A M B U D GE T | A CR O N Y MS TOT Transient Occupancy Tax
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
88 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | SOURCES
FY 2025/ 26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Change
FY 2025/26 to
FY 2026/27
Change
%
Revenue Sources1
:

Property Tax 101,272,800 106,111,600 125,796,513 24,523,713 24.2% Sales Tax 65,850,000 67,806,000 75,850,000 10,000,000 15.2% Transient Occupancy Tax 27,500,000 28,600,000 30,680,000 3,180,000 11.6% Franchise Tax 5,600,000 5,824,000 5,768,000 168,000 3.0% Gas Tax 6,600,000 6,600,000 6,700,000 100,000 1.5%
Other Taxes 2,000,032 2,040,033 2,040,042 40,010 2.0%
Planning Fees 8,486,000 8,758,000 8,758,000 272,000 3.2% Other Fees 86,171,075 116,522,619 187,178,951 101,007,876 117.2% Licenses and Permits 18,526,995 19,076,995 18,772,995 246,000 1.3% Fines and Penalties 1,557,000 1,557,000 2,307,000 750,000 48.2% Rents and Leases 11,147,081 11,991,495 11,810,705 663,624 6.0% Electric Utility 805,984,959 889,181,869 914,505,918 108,520,959 13.5% Electric Special Revenues 45,957,521 48,842,111 47,143,995 1,186,474 2.6% Water Utility 73,184,500 78,814,100 82,908,541 9,724,041 13.3% Sewer Utility 51,195,900 55,880,808 57,491,308 6,295,408 12.3% Water Recycling Utility 9,140,100 11,085,400 11,085,400 1,945,300 21.3% Solid Waste Services 41,362,560 43,317,062 43,923,712 2,561,152 6.2% Storm Drain Fees 2,908,000 2,908,000 2,908,000 0 0.0%
Miscellaneous Charges for Services 8,165,144 8,372,044 9,306,165 1,141,021 14.0% Grant Revenue 26,808,773 0 592,860 (26,215,913) (97.8%) Housing Related 2,420,832 3,139,436 3,106,648 685,816 28.3% Other Agencies 15,339,784 7,226,615 7,568,318 (7,771,466) (50.7%) Other Revenues 24,930,520 26,004,973 33,570,483 8,639,963 34.7% State Revenues 162,000 162,000 160,000 (2,000) (1.2%)
Traffic Mitigation 500,000 750,000 750,000 250,000 50.0% Interest Income 36,747,835 38,081,130 48,155,168 11,407,333 31.0% Reimbursements 20,336,592 10,602,067 9,632,779 (10,703,813) (52.6%) Developer Contributions 38,426,816 16,294,380 3,774,429 (34,652,387) (90.2%) Sale of Land or Property 161,919 161,919 161,919 0 0.0% Bond Proceeds 246,000,000 0 70,270,000 (175,730,000) (71.4%) Interdepartmental Revenue 120,861,262 125,603,728 125,613,961 4,752,699 3.9% Transfers From 449,049,604 72,804,550 131,679,702 (317,369,902) (70.7%) Gross Revenue 2,354,355,604 1,814,119,934 2,079,971,512 (274,384,092) (11.7%) Less Transfers In and Interfund
Revenues2
(569,910,866) (198,408,278) (257,293,663) 312,617,203 (54.9%) Net Revenue 1,784,444,738 1,615,711,656 1,822,677,849 38,233,111 2.1% Capital Improvement Program
Carryover
400,449,874 0 0 (400,449,874) (100.0%)
Use of Reserves (213,293,684) (211,315,963) (148,201,132) 65,092,552 (30.5%) Total Net Sources3
1,971,600,928 1,404,395,693 1,674,476,717 (297,124,211) (15.1%) 89 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | USES
FY 2025/ 26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Change
FY 2025/26 to
FY 2026/27
Change
%
Expenditures1
:

Operating Budget:

City Council 1,268,362 1,322,304 1,279,327 10,965 0.9%
City Attorney's Office 4,619,355 4,775,470 4,715,564 96,209 2.1% City Clerk's Office 1,761,474 2,377,619 2,388,984 627,510 35.6% City Auditor 1,075,554 1,095,175 1,099,342 23,788 2.2%
City Manager's Office 5,859,758 6,070,190 7,007,724 1,147,966 19.6% Community Development Department 37,614,828 28,911,168 29,197,934 (8,416,894) (22.4%) Electric Utility 811,160,337 891,651,758 1,013,995,071 202,834,734 25.0% Finance Department 20,903,394 21,857,706 26,575,294 5,671,900 27.1% Fire Department 81,298,549 84,205,231 86,874,535 5,575,986 6.9% Human Resources 5,470,869 5,368,086 6,165,743 694,874 12.7% Information Technology 18,955,875 18,617,307 19,168,788 212,913 1.1% Library Department 12,345,403 12,600,868 12,569,996 224,593 1.8% Parks & Recreation 26,785,682 27,417,078 28,128,554 1,342,872 5.0% Police Department 100,425,435 105,883,259 106,993,030 6,567,595 6.5% Public Works 98,202,966 100,496,111 104,111,401 5,908,435 6.0% Water and Sewer Utility Dept 138,922,887 142,861,443 141,871,722 2,948,835 2.1% Non-Departmental4
68,935,583 60,104,012 78,357,581 9,421,998 13.7%
Other Agency 11,404 11,612 12,000 596 5.2%
Internal Services 16,110,000 14,861,000 15,957,000 (153,000) (0.9%) Debt Service 273,224,645 27,234,381 64,467,696 (208,756,949) (76.4%) Gross Operating Budget 1,724,952,360 1,557,721,778 1,750,937,286 25,984,926 1.5% Less Transfers To and Interfund
Expenses2
(529,425,156) (302,635,147) (436,802,534) 92,622,622 (17.5%) Net Operating Budget 1,195,527,204 1,255,086,631 1,314,134,752 118,607,548 9.9% Capital Improvement Program Budget:

Total Capital Improvement Program 772,536,637 145,643,763 362,347,684 (410,188,953) (53.1%) Public Works Management Services 4,991,087 5,119,299 148,281 (4,842,806) (97.0%) Less Transfers To (1,454,000) (1,454,000) (2,154,000) (700,000) 48.1% Total Capital Improvement Program
Budget3
776,073,724 149,309,062 360,341,965 (415,731,759) (53.6%) Total Net Uses 1,971,600,928 1,404,395,693 1,674,476,717 (297,124,211) (15.1%) 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 2026/27 Adopted and Amended budgets; included in FY 2025/26 Adopted Budget 4 Includes Convention Center operating budget
90 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | REVENUE SUMMARY
Fund Type
FY 2024/25
Actual
FY 2025/26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Year-on-Year
Change
Change
%
General Fund
001 General Fund 362,293,165 337,651,037 340,402,275 362,657,199 25,006,162 7.4% Total General Fund 362,293,165 337,651,037 340,402,275 362,657,199 25,006,162 7.4% Special Revenue Funds
463 Bridge Maintenance District #2 Fund 127,294 91,800 93,600 93,600 1,800 2.0% 155 Building Development Services Fund 18,462,034 16,858,258 17,482,923 17,665,056 806,798 4.8% 220 Building Special Programs and Training
Fund
63,550 44,995 44,995 44,995 0 0.0%
165 City Affordable Housing Fund 1,058,780 1,253,326 1,265,252 1,265,252 11,926 1.0% 027 Community Facilities District No. 2019-1
(Lawrence Station) Fund
388,466 400,032 408,033 408,042
8,010 2.0%
026 Convention Center Maintenance District
Fund
1,890,255 1,993,225 2,143,265 2,543,225 550,000 27.6%
124 Developer Traffic Payments Fund 307,548 0 0 0 0 0.0% 025 Downtown Parking Maintenance Fund 143,871 153,584 160,983 157,212 3,628 2.4% 077 Endowment Care Fund 392,117 210,000 210,000 283,200 73,200 34.9% 144 Engineering Operating Grant Trust Fund 166,088 0 0 0 0 0.0% 079 Expendable Trust Fund 611,676 0 0 0 0 0.0%
159 Fire CUPA Fund 1,111,776 2,019,000 2,080,120 2,110,120 91,120 4.5% 158 Fire Development Service Fund 4,247,770 3,429,000 3,534,750 3,956,750 527,750 15.4% 178 Fire Operating Grant Trust Fund 6,637,580 4,891,112 0 0 (4,891,112) (100.0%) 121 Gas Tax Fund 4,399,882 3,950,000 3,950,000 3,950,000 0 0.0% 562 Housing and Urban Development Fund 2,941,197 5,427,794 806,269 773,481 (4,654,313) (85.7%) 164 Housing Authority Fund 57,621 281,088 286,710 286,710 5,622 2.0% 169 Housing Successor Agency Fund 1,542,552 1,302,573 1,317,124 1,317,124 14,551 1.1% 112 Library Operating Grant Trust Fund 252,099 64,709 0 0 (64,709) (100.0%) 101 Other City Departments Operating Grant
Trust Fund
1,692,806 0 0 0 0 0.0%
111 Parks and Recreation Operating Grant
Trust Fund
166,723 167,317 167,317 172,050 4,733 2.8%
076 Perpetual Care Fund 1,383 500 500 1,400 900 180.0%
177 Police Operating Grant Trust Fund 718,994 0 0 0 0 0.0% 157 Prefunded Plan Review Fund 68,000 0 0 0 0 0.0%
067 Public Donations Fund 34,833 0 0 0 0 0.0%
221 Public, Educational, and Governmental
Fee Fund
187,985 200,000 200,000 200,000 0 0.0%
122 Road Maintenance and Rehabilitation
(SB1) Fund
3,718,507 3,158,000 3,169,000 3,350,000 192,000 6.1%
123 Traffic Mitigation Fund 772,802 700,000 950,000 950,000 250,000 35.7% Total Special Revenue Funds 52,164,189 46,596,313 38,270,841 39,528,217 (7,068,096) (15.2%) Enterprise Funds
093 Cemetery Fund 1,636,600 1,738,609 1,806,587 1,690,506 (48,103) (2.8%) 860 Convention Center Enterprise Fund 18,944,281 17,759,017 19,159,951 19,179,746 1,420,729 8.0% 91 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | REVENUE SUMMARY
Fund Type
FY 2024/25
Actual
FY 2025/26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Year-on-Year
Change
Change
%
Enterprise Funds
191 Electric Operating Grant Trust Fund 44,810,028 48,108,165 51,266,059 49,346,427 1,238,262 2.6% 091 Electric Utility Fund 855,427,726 879,074,042 946,021,630 996,347,325 117,273,283 13.3% 094 Sewer Utility Fund 56,923,275 52,407,375 57,104,393 58,414,893 6,007,518 11.5% 096 Solid Waste Fund 41,085,256 42,390,177 44,060,626 44,732,276 2,342,099 5.5% 097 Water Recycling Fund 10,665,276 9,651,409 11,615,151 11,615,151 1,963,742 20.3% 092 Water Utility Fund 67,303,833 76,402,644 82,140,262 86,234,703 9,832,059 12.9% Total Enterprise Funds 1,096,796,275 1,127,531,438 1,213,174,659 1,267,561,027 140,029,589 12.4% Internal Service Funds
048 Communication Acquisitions Fund 2,030,904 1,064,336 1,068,501 1,068,501 4,165 0.4% 053 Fleet Operations Fund 6,150,434 6,747,970 6,940,571 7,259,876 511,906 7.6% 045 Information Technology Services Fund 15,239,338 18,127,387 18,417,936 18,968,788 841,401 4.6% 044 Public Works Capital Projects
Management Fund
4,373,674 4,991,087 5,119,299 3,593,216 (1,397,871) (28.0%) 082 Special Liability Insurance Fund 11,628,910 7,390,000 7,655,000 8,000,000 610,000 8.3% 087 Unemployment Insurance Fund 0 100,000 105,000 168,000 68,000 68.0% 050 Vehicle Replacement Fund 5,814,258 6,771,018 6,834,019 7,030,740 259,722 3.8% 081 Workers' Compensation Fund 6,213,344 6,858,000 7,101,000 7,260,000 402,000 5.9% Total Internal Service Funds 51,450,862 52,049,798 53,241,326 53,349,121 1,299,323 2.5% Capital Improvement Program Funds
593 Cemetery Capital Fund 4,689 0 0 0 0 100.0%
565 City Affordable Housing Capital Fund 3,662,403 0 0 0 0 0.0% 865 Convention Center Capital Fund 2,700,000 0 0 0 0 100.0% 591 Electric Utility Capital Fund 129,782,882 445,956,424 100,491,000 217,779,000 (228,177,424) (51.2%) 536 Fire Department Capital Fund 1,506,700 28,345 29,075 31,000 2,655 9.4% 539 General Government Capital Fund 4,507,104 776,902 849,783 3,576,000 2,799,098 360.3% 501 Infrastructure Replacement Capital
Fund
0 0 0 10,420,000 10,420,000 100.0%
537 Library Department Capital Fund 471,848 21,804 22,365 0 (21,804) (100.0%) 613 Measure I General Obligation Bond
Projects Fund
0 0 0 0 0 0.0%
532 Parks and Recreation Capital Fund 19,727,820 1,941,138 5,071,630 489,000 (1,452,138) (74.8%) 542 Patrick Henry Drive Infrastructure
Improvement Fund
4,266 0 0 0 0 0.0%
538 Public Buildings Capital Fund 3,519,049 497,511 192,343 1,217,500 719,989 144.7% 597 Recycled Water Capital Fund 0 50,000 50,000 50,000 0 0.0% 540 Related Santa Clara Developer Fund 505,344 803,406 808,048 744,929 (58,477) (7.3%) 594 Sewer Utility Capital Fund 17,971,106 15,216,632 8,774,449 19,495,281 4,278,649 28.1% 92 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | REVENUE SUMMARY
Fund Type
FY 2024/25
Actual
FY 2025/26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Year-on-Year
Change
Change
%
Capital Improvement Program Funds
596 Solid Waste Capital Fund 1,044,153 1,058,500 834,160 1,223,660 165,160 15.6% 535 Storm Drain Capital Fund 4,328,559 5,268,457 3,438,236 5,253,000 (15,457) (0.3%) 534 Street Lighting Capital Fund 10,365,837 125,000 125,000 7,647,000 7,522,000 6017.6% 533 Streets and Highways Capital
Fund
22,758,129 38,302,181 16,414,751 20,867,707 (17,434,474) (45.5%) 541 Tasman East Infrastructure
Improvement Fund
217,682 3,734,932 0 200,000 (3,534,932) (94.6%)
592 Water Utility Capital Fund 4,025,684 5,175,000 4,400,000 4,825,000 (350,000) 100.0% 227,103,255 518,956,232 141,500,840 293,819,077 (225,137,155) (43.4%) Other Agency Funds
801 Sports and Open Space Authority
Fund
10,560 10,404 10,612 12,000 1,596 15.3%
Total Other Agency Funds 10,560 10,404 10,612 12,000 1,596 15.3% Debt Service Funds
491 Electric Utility 160,948,721 270,118,403 22,783,040 23,483,040 (246,635,363) (91.3%) 413 Measure I General Obligation Bond
Debt Service
0 0 0 18,122,314 18,122,314 0.0%
431 Public Facilities Financing
Corporation Fund
1,442,122 1,441,979 1,435,579 1,435,579 (6,400) (0.4%)
494 Sewer Utility 1,801 0 3,300,762 20,003,938 20,003,938 0.0% Total Debt Service Funds 162,392,644 271,560,382 27,519,381 63,044,871 (208,515,511) (76.8%) Grand Total Revenues 1,952,210,950 2,354,355,604 1,814,119,934 2,079,971,512 (274,384,092) (11.7%) Total Capital Improvement Program
Funds
93 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | EXPENDITURE SUMMARY
Fund Type
FY 2024/25
Actual
FY 2025/26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Year-on-Year
Change
Change
%
General Fund
001 General Fund 313,264,889 335,374,572 342,972,517 365,418,808 30,044,236 9.0% Total General Fund 313,264,889 335,374,572 342,972,517 365,418,808 30,044,236 9.0% Special Revenue Funds
463 Bridge Maintenance District #2 Fund 0 0 420,000 420,000 420,000 0.0% 155 Building Development Services Fund 16,279,430 17,529,658 18,188,195 18,561,666 1,032,008 5.9% 220 Building Special Programs and Training
Fund
57,369 44,995 44,995 44,995 0 0.0%
165 City Affordable Housing Fund 1,042,149 6,984,995 1,891,765 1,839,672 (5,145,323) (73.7%) 027 Community Facilities District No. 2019-1
(Lawrence Station) Fund
233,303 396,315 406,768 404,243 7,928 2.0%
026 Convention Center Maintenance District
Fund
2,110,011 1,993,225 2,143,265 2,543,225 550,000 27.6%
025 Downtown Parking Maintenance Fund 136,451 139,990 147,412 230,012 90,022 64.3% 077 Endowment Care Fund 97,022 60,000 60,000 100,800 40,800 68.0% 144 Engineering Operating Grant Trust Fund 41,851 0 0 0 0 0.0% 079 Expendable Trust Fund 885,842 0 0 0 0 0.0%
159 Fire CUPA Fund 116,895 1,779,867 1,893,649 2,083,179 303,312 17.0% 158 Fire Development Service Fund 3,534,382 3,908,122 4,172,373 4,296,410 388,288 9.9% 178 Fire Operating Grant Trust Fund 5,181,816 5,274,893 0 0 (5,274,893) (100.0%) 121 Gas Tax Fund 4,520,000 2,975,000 2,990,250 3,615,250 640,250 21.5% 562 Housing and Urban Development Fund 2,957,757 5,427,794 806,269 773,481 (4,654,313) (85.7%) 164 Housing Authority Fund 164,885 459,878 471,936 474,519 14,641 3.2% 169 Housing Successor Agency Fund 553,194 1,127,973 1,152,142 1,164,658 36,685 3.3% 112 Library Operating Grant Trust Fund 189,122 166,833 0 0 (166,833) (100.0%) 101 Other City Departments Operating Grant
Trust Fund
1,364,581 0 0 0 0 0.0%
111 Parks and Recreation Operating Grant
Trust Fund
202,588 167,317 167,317 172,050 4,733 2.8%
076 Perpetual Care Fund 1,383 500 500 1,400 900 180.0%
177 Police Operating Grant Trust Fund 1,103,884 0 0 0 0 0.0% 157 Prefunded Plan Review Fund 150,993 0 0 0 0 0.0%
067 Public Donations Fund 96,947 0 0 0 0 0.0%
221 Public, Educational, and Governmental Fee
Fund
204,295 200,000 200,000 200,000 0 0.0%
122 Road Maintenance and Rehabilitation
(SB1) Fund
4,301,915 2,900,000 2,900,000 4,522,153 1,622,153 55.9% 123 Traffic Mitigation Fund 1,331,000 500,000 750,000 1,751,500 1,251,500 250.3% Total Special Revenue Funds 46,859,065 52,037,355 38,806,836 43,199,213 (8,838,142) (17.0%) Enterprise Funds
093 Cemetery Fund 1,243,054 1,757,102 1,671,013 1,673,539 (83,563) (4.8%) 860 Convention Center Enterprise Fund 18,046,236 18,174,268 19,618,653 19,554,727 1,380,459 7.6% 191 Electric Operating Grant Trust Fund 53,562,624 59,000,124 40,969,800 65,867,686 6,867,562 11.6% 94 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | EXPENDITURE SUMMARY
Fund Type
FY 2024/25
Actual
FY 2025/26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Year-on-Year
Change
Change
%
Enterprise Funds
091 Electric Utility Fund 700,300,332 752,160,213 850,681,958 953,861,619 201,701,406 26.8% 094 Sewer Utility Fund 51,149,222 55,662,489 53,615,148 51,233,638 (4,428,851) (8.0%) 096 Solid Waste Fund 40,660,344 42,617,265 44,611,836 46,010,152 3,392,887 8.0% 097 Water Recycling Fund 9,715,244 10,940,055 12,078,471 12,051,002 1,110,947 10.2% 092 Water Utility Fund 64,850,449 72,320,343 77,167,824 78,587,082 6,266,739 8.7% Total Enterprise Funds 939,527,505 1,012,631,859 1,100,414,703 1,228,839,445 216,207,586 21.4% Internal Service Funds
048 Communication Acquisitions Fund 5,930,773 1,064,336 1,068,501 1,068,501 4,165 0.4% 053 Fleet Operations Fund 5,707,019 6,757,227 6,951,987 7,261,619 504,392 7.5% 045 Information Technology Services Fund 12,684,597 18,755,875 18,417,307 18,968,788 212,913 1.1% 044 Public Works Capital Projects
Management Fund
4,159,944 4,991,087 5,119,299 3,593,216 (1,397,871) (28.0%) 082 Special Liability Insurance Fund 10,545,291 9,152,000 7,655,000 8,529,000 (623,000) (6.8%) 087 Unemployment Insurance Fund 93,437 100,000 105,000 168,000 68,000 68.0% 050 Vehicle Replacement Fund 6,682,667 3,994,000 1,863,635 2,151,000 (1,843,000) (46.1%) 081 Workers' Compensation Fund 5,421,127 6,858,000 7,101,000 7,260,000 402,000 5.9% Total Internal Service Funds 51,224,855 51,672,525 48,281,729 49,000,124 (2,672,401) (5.2%) Capital Improvement Program Funds
593 Cemetery Capital Fund 4,689 270,489 0 0 (270,489) (100.0%) 865 Convention Center Capital Fund 1,866,520 2,509,218 0 0 (2,509,218) (100.0%) 591 Electric Utility Capital Fund 58,602,434 558,300,130 100,491,000 217,779,000 (340,521,130) (61.0%) 536 Fire Department Capital Fund 1,056,404 991,564 29,075 31,000 (960,564) (96.9%) 539 General Government Capital Fund 2,108,984 11,819,408 849,783 3,576,000 (8,243,408) (69.7%) 537 Library Department Capital Fund 83,958 672,126 22,365 0 (672,126) (100.0%) 613 Measure I General Obligation Bond
Projects Fund
0 0 0 63,214,425 63,214,425 0.0%
532 Parks and Recreation Capital Fund 3,612,492 42,292,167 5,797,869 4,296,000 (37,996,167) (89.8%) 538 Public Buildings Capital Fund 1,842,900 5,238,705 192,343 1,217,500 (4,021,205) (76.8%) 597 Recycled Water Capital Fund 11,214 50,000 50,000 50,000 0 0.0% 540 Related Santa Clara Developer Fund 865,793 803,406 808,048 744,929 (58,477) (7.3%) 594 Sewer Utility Capital Fund 11,426,874 50,996,124 16,080,567 31,030,379 (19,965,745) (39.2%) 596 Solid Waste Capital Fund 791,089 837,000 834,160 1,234,160 397,160 47.5% 95 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | B UD G E T S U MM A R Y BUDGET SUMMARY | EXPENDITURE SUMMARY
Fund Type
FY 2024/25
Actual
FY 2025/26
Adopted
FY 2026/27
Adopted
FY 2026/27
Amended
Year-on-Year
Change
Change
%
Capital Improvement Program Funds
535 Storm Drain Capital Fund 3,564,180 9,158,228 3,438,236 5,253,000 (3,905,228) (42.6%) 534 Street Lighting Capital Fund 1,027,140 2,734,440 125,000 7,647,000 4,912,560 179.7% 533 Streets and Highways Capital Fund 20,790,330 73,448,885 16,814,751 20,867,707 (52,581,178) (71.6%) 541 Tasman East Infrastructure
Improvement Fund
27,793 4,260,226 29,865 29,865 (4,230,361) (99.3%)
592 Water Utility Capital Fund 4,919,465 13,145,608 5,200,000 5,525,000 (7,620,608) (58.0%) Total Capital Improvement Program Funds 112,602,259 777,527,724 150,763,062 362,495,965 (415,031,759) (53.4%) Other Agency Funds
801 Sports and Open Space Authority Fund 10,652 11,404 11,612 12,000 596 5.2% Total Other Agency Funds 10,652 11,404 11,612 12,000 596 5.2% Debt Service Funds
491 Electric Utility 40,698,621 268,518,403 22,533,040 23,233,040 (245,285,363) (91.3%) 413 Measure I General Obligation Bond Debt
Service
0 0 0 19,829,924 19,829,924 0.0%
431 Public Facilities Financing Corporation
Fund
1,406,100 1,406,979 1,400,579 1,400,794 (6,185) (0.4%)
494 Sewer Utility 3,301,012 3,299,263 3,300,762 20,003,938 16,704,675 506.3% Total Debt Service Funds 45,405,733 273,224,645 27,234,381 64,467,696 (208,756,949) (76.4%) Grand Total Expenditures 1,508,894,958 2,502,480,084 1,708,484,840 2,113,433,251 (389,046,833) (15.5%) 96 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S FE R S CH E DU LE BUDGET SUMMARY | TRANSFER SCHEDULE
Fund In Out
From General Fund (001) 29,502,778
To Building Development Services Fund (155) 335,056
To Cemetery Fund (093) 976,306
To Convention Center Enterprise Fund (860) 448,195
To Convention Center Maintenance District Fund (026) 1,163,014 To Downtown Parking Maintenance District Fund (025) 143,012 To Fire Department Capital Fund (536) 31,000
To General Government Capital Fund (539) 3,250,000
To Infrastructure Replacement Capital Fund (501) 10,420,000 To Parks and Recreation Capital Fund (532) 489,000
To Parks and Recreation Operating Grant Trust Fund (111) 17,150 To Public Buildings Capital Fund (538) 1,103,200
To Public Facilities Financing Corporation Fund (431) 1,400,579 To Public Works Capital Project Management Fund (044) 3,086,840 To Solid Waste Fund (096) 102,564
To Sports and Open Space Authority Fund (801) 12,000
To Storm Drain Capital Fund (535) 3,799,000
To Streets and Highways Capital Fund (533) 2,725,862
Subtotal Transfer from General Fund 29,502,778 29,502,778 From Bridge Maintenance District #2 Fund (463) 420,000
To Streets and Highways Capital Fund (533) 420,000
Subtotal Transfer from Bridge Maintenance District #2 Fund 420,000 420,000 From Building Development Services Fund (155) 327,578
To General Fund (001) 319,578
To Building Special Programs & Training Fund (220) 7,000 To Public Buildings Capital Fund (538) 1,000
Subtotal Transfer from Building Development Services Fund 327,578 327,578 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
Amended FY 2026/27
Transfer
97 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S FE R S CH E DU LE BUDGET SUMMARY | TRANSFER SCHEDULE
Fund In Out
From Electric Operating Grant Trust Fund (191) 49,338,704 To Electric Utility Capital Fund (591) 3,010,000
To Electric Utility Fund (091) 45,000,000
To Streets and Highways Capital Fund (533) 1,328,704
Subtotal Transfer from Electric Operating Grant Trust Fund 49,338,704 49,338,704 From Electric Utility Fund (091) 188,332,210
To Electric Utility Capital Fund (591) 156,967,000
To Electric Utility Debt Service Fund (491) 23,233,040
To General Fund (001) 225,120
To General Government Capital Fund (539) 204,000
To Public Buildings Capital Fund (538) 56,050
To Street Lighting Capital Fund (534) 7,647,000
Subtotal Transfer from Electric Utility Fund 188,332,210 188,332,210 From Endowment Care Fund (077) 100,800
To Cemetery Fund (093) 100,800
Subtotal Transfer from Endowment Care Fund 100,800 100,800 From Gas Tax Fund (121) 3,615,250
To Streets and Highways Capital Fund (533) 3,615,250
Subtotal Transfer from Gas Tax Fund 3,615,250 3,615,250 From Perpetual Care Fund (076) 1,400
To Cemetery Fund (093) 1,400
Subtotal Transfer from Perpetual Care Fund 1,400 1,400
From Road Maintenance and Rehabilitation (SB1) Fund (122) 4,522,153 To Streets and Highways Capital Fund (533) 4,522,153
Subtotal Transfer from Road Maintenance and Rehabilitation (SB1) Fund
4,522,153 4,522,153
From Sewer Utility Capital Fund (594) 700,000
To Water Utility Capital Fund (592) 700,000
Subtotal Transfer from Sewer Utility Capital Fund 700,000 700,000 Amended FY 2026/27
Transfer
98 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | T R AN S FE R S CH E DU LE BUDGET SUMMARY | TRANSFER SCHEDULE
Fund In Out
From Sewer Utility Debt Service Fund (494) 15,500,000
To Sewer Utility Capital Fund (594) 15,500,000
Subtotal Transfer from Sewer Utility Debt Service Fund 15,500,000 15,500,000 From Sewer Utility Fund (094) 8,720,120
To Public Buildings Capital Fund (538) 14,525
To Public Works Capital Project Management Fund (044) 506,376 To Sewer Utility Capital Fund (594) 3,695,281
To Sewer Utility Debt Service Fund (494) 4,503,938
Subtotal Transfer from Sewer Utility Fund 8,720,120 8,720,120 From Solid Waste Fund (096) 986,035
To Public Buildings Capital Fund (538) 9,875
To Solid Waste Capital Fund (596) 976,160
Subtotal Transfer from Solid Waste Fund 986,035 986,035 From Storm Drain Capital Fund (535) 1,454,000
To General Fund (001) 1,454,000
Subtotal Transfer from Storm Drain Capital Fund 1,454,000 1,454,000 From Traffic Mitigation Fund (123) 1,751,500
To Streets and Highways Capital Fund (533) 1,751,500
Subtotal Transfer from Traffic Mitigation Fund 1,751,500 1,751,500 From Water Recycling Fund (097) 50,000
To Recycled Water Capital Fund (597) 50,000
Subtotal Transfer from Water Recycling Fund 50,000 50,000 From Water Utility Fund (092) 4,279,850
To General Government Capital Fund (539) 122,000
To Public Buildings Capital Fund (538) 32,850
To Water Utility Capital Fund (592) 4,125,000
Subtotal Transfer from Water Utility Fund 4,279,850 4,279,850 Total Transfers 309,604,143 309,604,143
Amended FY 2026/27
Transfer
99 FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY THEME
FY 2026/27
Proposed
FY 2027/28
Proposed
FY 2028/29
CIP
FY 2029/30
CIP
FY 2030/31
CIP
Five-Year CIP
Total
Theme
Administrative Facilities 12,707,950 3,482,500 1,450,000 0 0 17,640,450 Community Facilities 6,693,750 0 1,620,000 522,000 0 8,835,750 Electric Utility 225,426,000 171,415,000 202,979,000 82,707,000 56,866,000 739,393,000 Other Community Projects 3,824,794 3,779,339 3,784,898 3,787,860 3,791,196 18,968,087 Parks and Trails 7,296,000 742,145 11,836,450 0 0 19,874,595 Sewer Utility 30,330,379 29,553,430 23,389,089 21,599,361 52,073,508 156,945,767 Solid Waste 1,234,160 3,060,000 884,000 910,520 937,836 7,026,516 Storm Drain 19,516,300 416,000 150,000 150,000 150,000 20,382,300 Technology and Equipment 557,000 386,000 347,000 359,000 371,000 2,020,000 Transportation 47,180,632 14,306,541 13,231,429 11,332,967 11,234,617 97,286,186 Water and Recycled Water Utilities 5,575,000 5,575,000 5,425,000 3,925,000 3,925,000 24,425,000 Five-Year CIP Total 360,341,965 232,715,955 265,096,866 125,293,708 129,349,157 1,112,797,651 Administrative
Facilities,
$17,640,450
Community Facilities,
$8,835,750
Electric Utility,
$739,393,000 Other Community
Projects,
$18,968,087
Parks and Trails,
$19,874,595
Sewer Utility,
$156,945,767
Solid Waste,
$7,026,516
Storm Drain,
$20,382,300
Technology and
Equipment,
$2,020,000
Transportation,
$97,286,186
Water and Recycled
Water Utilities,
$24,425,000
Proposed Five-Year CIP
100
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY FUND
FY 2026/27
Proposed
FY 2027/28
Proposed
FY 2028/29
CIP
FY 2029/30
CIP
FY 2030/31
CIP
Five-Year CIP
Total
Fund
Electric Utility Capital Fund 217,779,000 171,187,000 202,750,000 82,477,000 56,635,000 730,828,000 Fire Department Capital Fund 31,000 0 0 0 0 31,000
General Government Capital Fund 3,576,000 3,436,000 3,347,000 3,359,000 3,371,000 17,089,000 Library Department Capital Fund 0 0 1,620,000 522,000 0 2,142,000 Measure I General Obligation
Bond Projects Fund
63,214,425 0 0 0 0 63,214,425
Parks and Recreation Department
Capital Fund
4,296,000 742,145 11,836,450 0 0 16,874,595
Public Buildings Capital Fund 1,217,500 3,432,500 1,450,000 0 0 6,100,000 Recycled Water Capital Fund 50,000 50,000 50,000 50,000 50,000 250,000 Related Santa Clara Developer
Fund
744,929 748,877 753,827 756,168 758,870 3,762,671
Sewer Utility Capital Fund 30,330,379 29,553,430 23,389,089 21,599,361 52,073,508 156,945,767 Solid Waste Capital Fund 1,234,160 3,060,000 884,000 910,520 937,836 7,026,516 Storm Drain Capital Fund 3,799,000 416,000 150,000 150,000 150,000 4,665,000 Street Lighting Capital Fund 7,647,000 228,000 229,000 230,000 231,000 8,565,000 Streets and Highways Capital
Fund
20,867,707 14,306,541 13,231,429 11,332,967 11,234,617 70,973,261 Tasman East Infrastructure
Improvement Fund
29,865 30,462 31,071 31,692 32,326 155,416
Water Utility Capital Fund 5,525,000 5,525,000 5,375,000 3,875,000 3,875,000 24,175,000 Five-Year CIP Total 360,341,965 232,715,955 265,096,866 125,293,708 129,349,157 1,112,797,651 101
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY FUND
Electric Utility Capital
Fund, $730,828,000
Fire Department
Capital Fund,
$31,000
General Government
Capital Fund,
$17,089,000
Library Department
Capital Fund,
$2,142,000
Measure I GO Bond
Projects Fund,
$63,214,425
Parks and Recreation
Capital Fund, $16,874,595
Public Buildings
Capital Fund,
$6,100,000
Recycled Water Capital
Fund, $250,000
Related Santa Clara
Developer Fund,
$3,762,671
Sewer Utility
Capital Fund,
$156,945,767
Solid Waste Capital
Storm Drain Capital Fund, Fund, $7,026,516
$4,665,000
Street Lights Capital Fund,
$8,565,000
Streets and Highways
Capital Fund,
$70,973,261
Tasman East
Infrastructure
Improvement Fund,
$155,416
Water Utility
Capital Fund,
$24,175,000
Proposed Five-Year CIP
102
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM UNFUNDED LIST
Five-Year
Unfunded Total
Administrative Facilities
ADA Transition Plan Implementation (Public Buildings) 6,525,000 City Hall HVAC Rehabilitation Project 5,290,000
Electric Vehicle Charging (Fleet) 1,600,000
Morse Mansion Maintenance & Repair 150,000
Public Building Parking Lot Improvements 5,589,000
Repair to Historic Buildings 375,000
Repairs-Modifications to City Buildings 525,000
Stationary Standby Generators 8,165,000
Triton Museum Repair and Modifications 105,000
Administrative Facilities Unfunded Subtotal 28,324,000
Community Facilities
Aged Infrastructure at Critical/Poor Buildings 49,434,406 Central Park Library – Front Exterior Lighting 529,000
Central Park Library – Tackable Walls - Acoustic Panels 39,500 Community Facilities Unfunded Subtotal 50,002,906
Convention Center
Santa Clara Convention Center Condition Assessment Repair 10,396,410 Convention Center Unfunded Subtotal 10,396,410
Other Community Projects
ADA Self Evaluation and Transition Plan Update 100,000
Other Community Projects Unfunded Subtotal 100,000
Parks and Trails
Aged Infrastructure at Critical/Poor Parks 86,332,309
Park Improvements and Repairs 1,603,497
Parks and Trails Unfunded Subtotal 87,935,806
Storm Drain
Storm Drain System Improvements 21,600,000
Storm Drain Unfunded Subtotal 21,600,000
103
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM UNFUNDED LIST
Five-Year
Unfunded Total
Technology and Equipment
Intranet Collaboration Suite Implementation 200,000
Technology and Equipment Unfunded Subtotal 200,000
Transportation
ADA Transition Plan Implementation (Public Right of Way) 1,725,000 Annual Street Maintenance and Rehabilitation Program 17,750,000 Bridge Maintenance Program 2,520,000
De La Cruz Boulevard Class IV Bikeway Improvements 5,666,600 Median Islands Water Conservation and Drought Tolerant Landscape Improvements 2,592,000 Multimodal Improvement Plan Phase 1 Projects 740,000
Multimodal Improvement Plan Phase 2 Projects 1,340,000
Pruneridge Avenue Complete Streets Plan 3,700,000
Public Alley Pavement Maintenance and Rehabilitation 1,800,000 Sidewalk, Curb and Gutter Repair 2,679,305
Vision Zero Priority Corridor Improvements 11,300,000
Walsh Avenue Class IV Bikeway Study - Phase 2 2,500,000 Transportation Unfunded Subtotal 54,312,905
Five-Year Unfunded Total 252,872,027
Unfunded amounts do not capture all needs identified in the following plans:
 Parks and Recreation Master Plan Phase 1 (Years 1-5 in 2025 dollars) - $185 million to $260 million; new facilities planned for the later phases of the master plan  Library Facilities Master Plan – over $55 million for existing and new facilities (2025 dollars)  Vision Zero Action Plan - $350 million (2025 dollars) of capital improvements on the citywide high-injury network
 Storm Drain Master Plan - $290 million (in 2018 dollars) and the Storm Drain Pump Station Evaluation identified $3 million (2018 dollars) annually for pump station repair, maintenance and upgrades  Santa Clara Bicycle Plan Update 2018 - $39.3 million (in 2018 dollars)  Santa Clara Pedestrian Master Plan - $194.0 million (in 2019 dollars)  Americans with Disabilities Act Self-Evaluation and Transition Plan (Draft) - $758.5 million (in 2024 dollars)
 Public buildings (e.g., new City Hall, existing City Hall, historic buildings, corporation yard) 104
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM OPERATING IMPACTS
FY 2026/27
Proposed
FY 2027/28
Proposed
FY 2028/29
CIP
FY 2029/30
CIP
FY 2030/31
CIP
Technology and Equipment
City Hall Data Center HVAC Remediation 0 0 5,000 5,000 5,000 Replacement VOIP Phone System for Aging
Mitel Connect
0 25,000 25,000 25,000 25,000
Technology and Equipment Operating
Impacts Subtotal
0 25,000 30,000 30,000 30,000
Transportation
Adaptive Signal System 11,550 12,128 12,734 13,371 14,040 Adaptive Signal System (Santana West
Settlement Agreement)
510 520 530 540 550
Bassett and Laurelwood Bicycle Lanes 510 520 531 541 552 Changeable Message Signs 1,071 1,092 1,114 1,136 1,159
HAWK Beacon on Scott and Harrison 750 750 750 750 750
Traffic Calming (Santana West Settlement
Agreement)
102 104 106 108 110
Traffic Pre-Emptors 11,730 11,965 12,204 12,448 12,697
Traffic Signal Management Software
Upgrade/Replacement
0 16,538 17,364 18,232 19,144
Uncontrolled Crosswalks Improvements 780 796 812 828 845 Transportation Operating Impacts Subtotal 27,003 44,413 46,145 47,954 49,847 Five-Year Operating Impacts Total 27,003 69,413 76,145 77,954 79,847 105
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | C IP S U M M AR I E S A N D GR A P HS

CAPITAL IMPROVEMENT PROGRAM BUDGET BY EXPENDITURE

CATEGORY
FY 2026/27
Proposed
FY 2027/28
Proposed
FY 2028/29
CIP
FY 2029/30
CIP
FY 2030/31
CIP
Five-Year CIP
Total
Expenditure Category
Construction 143,561,999 116,124,886 171,879,858 54,534,458 103,767,571 589,868,772 Contingency/Miscellaneous 34,290,704 20,599,800 55,264,208 11,382,441 8,040,433 129,577,586 Engineering 44,551,128 15,537,676 15,313,320 12,721,641 5,662,283 93,786,048 Engineering Management Services 95,281 97,471 99,653 0 0 292,405 Equipment 124,498,000 60,752,000 13,520,000 35,249,000 4,075,000 238,094,000 Land 0 8,736,000 0 0 0 8,736,000
Personnel 13,344,853 10,868,122 9,019,827 11,406,168 7,803,870 52,442,840 Five-Year CIP Total 360,341,965 232,715,955 265,096,866 125,293,708 129,349,157 1,112,797,651 106
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | G O B O ND P R O G R A M S U M M A RY

GENERAL OBLIGATION BOND PROGRAM SUMMARY
On November 5, 2024, voters in the City of Santa Clara approved ballot Measure I, the Public Facilities and Infrastructure Bond Measure. This general obligation (GO) bond authorizes the issuance of $400 million to help address over $600 million in unfunded infrastructure needs. City staff have identified priority projects within the Expenditure Plan, and the bond funding will provide a clear path forward for making essential repairs and improvements across Santa Clara. In September 2025 City Council voted unanimously to approve the Phase I project list and initiated the steps to issue bonds for the first $100 million dollar tranche. Bond sales were held in February 2026 to provide the necessary financing for the first tranche.

EXPENDITURE PLAN
The expenditure plan is broken down into the categories below. The detailed plan by project is provided at the end of this section, including the breakdown of projects funded with the first tranche of bond proceeds during FY 2025/26 and a description of those projects.

PROJECTED TIMELINE
It is expected that the bonds will be issued in three phases and project delivery will go through 2036. This CIP reflects the projects from the first tranche of bond proceeds. The second and third tranches will be reflected in future CIPs.

Fire 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)
Tranche 1 (approx. $100 M): 2026 - 2029
Tranche 2 (approx. $200 M): 2028 - 2033
Tranche 3 (approx. $100 M): 2031 - 2036
2026 2036
107
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | G O B O ND P R O G R A M S U M M A RY

ACCOMPLISHMENTS
 Emergency Operations Center (EOC) Security
Upgrades Project – The project includes the design
and installation of perimeter fencing around the site
and access gates to enhance site security. The
project was successfully completed in November
2025 and partially funded by the Measure I Bond
Program. Bond funding of $250,000 was used to
support the EOC Security Upgrades Project.
 International Swim Center Rehabilitation Phase I Project – This project will replace the pool decking, diving tower and all pumping and recirculation systems for the aging pools and facility.

Construction started in March 2026 with anticipated completion in Fall 2027.
 Henry Schmidt Park Playground Rehabilitation Project – This project will renovate and modernize the playground facilities at Henry Schmidt Park. Upgrades include new equipment, enhanced safety features, and improved accessibility to ensure the playground meets community needs. The project was awarded for construction in November 2025 with anticipated completion in Spring 2027.

CIP PROJECT HIGHLIGHTS
 Fire Station 5 Design and Fire Station 7 Study – These projects will replace or renovate the existing fire stations to meet current and future operational needs. To expedite the delivery of these two projects, a Request for Proposals was issued to allow the City to select one or more consultants to complete the design for Fire Station 5 and conduct a preliminary study for Fire Station 7.  Parks and Storm Drain Improvement Projects – Several projects, including the Warburton Park Playground Rehabilitation Project, Hope Street Drive Green Stormwater Infrastructure Project, Central Santa Clara Bicycle Pedestrian and Green Stormwater Infrastructure Project, and Bowers Avenue Underpass Storm Drain Pump Station Rehabilitation Project, are in different stages of the design phase with anticipated construction award dates beginning late 2026 through 2027.
 Streets and Transportation Projects – These projects, including Street Resurfacing and Rehabilitation, ADA Improvements, Creek Trail Rehabilitation, and Bicycle Wayfinding, are in different stages of the design phase with anticipated construction award dates mid 2027 through 2028.

Emergency Operations Center Security Upgrades Project
International Swim Center Rehabilitation
Phase 1 Project Rendering
Measure I Community Engagement
108
City of
Santa Clara
FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | G O B O ND P R O G R A M S U M M A RY

TRANSPARENCY AND ACCOUNTABILITY
 The bond proceeds can only be spent on projects and programs that serve Santa Clara and must align to the adopted Expenditure Plan, as it may be amended from time to time in accordance with the required process to amend the plan.
 With the exception of the project management and delivery costs, Bond proceeds cannot be used for employee salaries. The City’s administrative costs are capped at 5% of the proceeds.
 The City is required to conduct annual independent performance audits and financial audits, and those audits will be submitted to the California State Auditor for review. The audits will be posted on the City’s website.  The City has appointed a Citizens’ Oversight Committee, also known as the Bond Compliance Oversight Committee, to ensure that Bond proceeds are expended only for the purposes described in the measure approved by the voters.
 A separate fund has been established to account for the Bond proceeds and expenditures.
 At least annually, the Finance Director will report to the City Council on the actual bond proceeds and expenditures and the status of improvements.  Bond proceeds cannot be used for improvements to Levi’s Stadium, projects within 0.5 miles of Levi’s Stadium (except improvements in existing residential neighborhoods designed to benefit those areas), or improvements that benefit any professional sports team.

BOND COMPLIANCE OVERSIGHT COMMITTEE
The Bond Compliance Oversight Committee consists of nine members selected by a lottery process and appointed by the City Council. The committee includes seven residents, one large business representative, and one small business representative (neither of which must be residents, but both must be either an owner or employee of a business headquartered within the City). Additionally, no business representative shall work for, have previously worked for, or be employed by a firm that provides services to any professional sports team within the City.

The role of the Bond Compliance Oversight Committee is to:

1. ensure that project implementation is consistent with all Bond measure requirements, including the terms of the Expenditure Plan;

2. review and report on annual audits;

3. review and provide recommendations to the City Council on any proposed amendment to the Expenditure Plan; and

4. inform the public concerning the expenditure of Bond proceeds.

Amending the
Expenditure Plan

1. 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.
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | G O B O ND P R O G R A M S U M M A RY Project Areas
First
Tranche
Remaining
Tranches Total
Street Resurfacing and Rehabilitation $16,000,000 $7,000,000 $23,000,000 ADA Improvements $5,000,000 $5,000,000 $10,000,000
Creek Trail Rehabilitation $2,500,000 $0 $2,500,000
Bicycle Wayfinding $300,000 $0 $300,000
Contingency/Escalation/Administration $3,570,000 $1,800,000 $5,370,000 Streets and Transportation $27,370,000 $13,800,000 $41,170,000 Fire Station 5 Replacement $4,000,000 $23,000,000 $27,000,000 Fire Station 7 Replacement $4,000,000 $23,000,000 $27,000,000 Fire Station 9 Replacement/Renovations $0 $9,000,000 $9,000,000 Fire Station 1 Replacement/Renovations $0 $58,000,000 $58,000,000 Fire Training Tower Renovation $783,000 $0 $783,000
Various Fire Station Infrastructure Upgrades $1,900,000 $0 $1,900,000 Contingency/Escalation/Administration $1,602,450 $16,950,000 $18,552,450 Fire Stations and Emergency Response $12,285,450 $129,950,000 $142,235,450 Police Department Drone First Responder Infrastructure $50,000 $2,950,000 $3,000,000 Emergency Operations Center Infrastructure $250,000 $0 $250,000 Police Training Facility $250,000 $29,750,000 $30,000,000 Police Department Facility and Real-Time Crime Center Infrastructure $150,000 $4,850,000 $5,000,000 Contingency/Escalation/Administration $105,000 $5,632,500 $5,737,500 Police Facilities $805,000 $43,182,500 $43,987,500
Renovation/Expansion of 3 Public Libraries $7,100,000 $9,000,000 - Central Library Restrooms Remodeling & Access Control Redesign $250,000 - Central Library Lighting Control System Replacement $250,000 - Central Library Entry Auto Door System Replacement $200,000 - Central, Mission, and North side Libraries Renovation Designs $1,200,000 Senior Center Expansion/Renovation $0 $9,500,000 $9,500,000 Community Aquatic Facility/ISC Renovation/Replacement $20,800,000 $45,000,000 - Community ISC Aquatic Facility (Phase 1) $22,200,000
- Community ISC Aquatic Facility (Phase 2) $2,000,000
Bowers Park Renovations $0 $4,400,000 $4,400,000
Earl Carmichael Park Playground Renovations $0 $2,900,000 $2,900,000 Warburton Park Playground Renovations $3,000,000 $0 $3,000,000 Henry Schmidt Park Playground Renovations $4,325,000 $0 $4,325,000 Pickleball Court $0 $1,600,000 $1,600,000
Mary Gomez Park Renovations $0 $2,500,000 $2,500,000
Aged Parks & Buildings Infrastructure in Critical/Poor Condition $0 $18,000,000 $18,000,000 Contingency/Escalation/Administration $5,013,750 $10,020,000 $15,033,750 Parks, Library, Senior Center, and Aquatics Facilities $38,438,750 $76,820,000 $115,258,750 Stormdrain System Improvements $5,000,000 $11,423,000 $16,423,000 Storm Water Retention Basin Remediation $0 $9,209,000 $9,209,000 Green Stormwater Infrastructure Design & Construction $6,645,000 $0 $6,645,000 Lafayette St. Underpass at Subway Pump Station $0 $4,946,000 $4,946,000 Bowers Ave Underpass SDPS Rehabilitation $2,030,000 $0 $2,030,000 SDPS Motor and Control Replacement $347,000 $0 $347,000 Stormdrain Pump Station Outfall Reconstruction Program $250,000 $0 $250,000 Stormdrain Renovations $150,000 $0 $150,000
Contingency/Escalation/Administration $2,163,300 $3,836,700 $6,000,000 Storm Drain System Improvements $16,585,300 $29,414,700 $46,000,000 Street/Median Beautification Improvements $0 $4,000,000 $4,000,000 Renovations to Historic Buildings $0 $3,000,000 $3,000,000 Triton Museum Improvements $1,000,000 $0 $1,000,000
Contingency/Escalation/Administration $150,000 $1,050,000 $1,200,000 Historic Buildings and Beautification $1,150,000 $8,050,000 $9,200,000 $2,000,000 $0 $2,000,000
Total $ 98,634,500 $ 301,217,200 $ 399,851,700
Measure I General Obligation Bond Projects
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FY 20 2 6/ 2 7 A N D F Y 2 02 7 / 2 8 P RO P O S E D C A P I T A L I M P R O V E M E N T P R O G RA M B UD G E T | G O B O ND P R O G R A M S U M M A RY TRANCHE 1 PROJECT DESCRIPTIONS
Projects
Tranche 1
Total Project Description
Streets and Transportation
Street Resurfacing and
Rehabilitation
$16,000,000 Projects under this category will implement previously unfunded pavement rehabilitation work on arterial and
collector streets based upon pavement condition surveys and analysis through the City’s Pavement Management System.

City Council and Authorities ConcurrentJune 9, 2026

City Council and Authorities Concurrent
June 9, 2026