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THE CITY OF <br /> p LE ASANTON. <br /> MEMORANDUM <br /> Date: June 17, 2014 <br /> To: Honorable Mayor and City Council <br /> From: Nelson Fialho, City Manager <br /> Subject: 2014/15FY Mid-Term Update —Operating Budget & Capital Improvement <br /> Program <br /> This document provides updated budget estimates for the 2014/15FY which is the second year <br /> of the 2013/14FY & 2014/15FY Two-Year Budget originally adopted by City Council in June <br /> 2013. Updated estimates are based on staffs assessment of current financial conditions as <br /> we are about to enter the second year of the two-year budget. The Mid-Term Budget <br /> document is intended to provide the Council with the information necessary to ensure that the <br /> second year of the budget adequately addresses the City Council's priorities and the needs of <br /> the community. This document also reflects previously approved and updated performance <br /> measures. The measures are an important step in organizational management and ongoing <br /> community planning. <br /> East Bay and The Local Economy <br /> Financial recovery continues for the City and the local economy. Experts agree that recovery <br /> has been slow, spotty, and somewhat uncertain as to its sustainability in the future. <br /> Pleasanton has benefitted financially from growth opportunities that exist for businesses <br /> located in the East Bay, as well as those who want to relocate to the East Bay to take <br /> advantage of a highly educated workforce and a lower cost of living as compared to San <br /> Francisco and the Peninsula. While the Pleasanton retail and business base is relatively <br /> strong compared to other areas of the East Bay, our recovery has been consistent with that of <br /> the region as a whole because our local economy is tied to the economy of the Tri-Valley and <br /> East Bay region. Pleasanton's residential real estate recovery since the recession has been <br /> stronger and faster than any other community in the Tri-Valley as a result of our quality of life, <br /> safe community and highly rated public schools. <br /> Water Drought <br /> The most pressing issue facing the City in the near future is the water shortage and its impacts <br /> on the City's publicly operated utilities, its residents and businesses. A twenty-five percent <br /> (25%) reduction in water consumption not only effects the financial position of the water utility <br /> but also the sewer utility because commercial sewer fees are a function of the amount of water <br /> 1 <br />