CITY COUNCIL SPECIAL MEETING AGENDA PACKET 2

Page 3 of 7 support were submitted, totaling $53.4 million. The estimated existing general fund and developer impact funds resources plus various available transportation and grants funds over the five-year CIP period is $40.0 million, including $2.4 million from recommended projects to defund. The funding is comprised of: $15.5 million in General Fund contributions, $8.2 million in general and park general CIP funds, $3.7 million in developer impact funds plus an additional $1 million of anticipated revenue, $4.0 million of anticipated earned interest income and $7.6 million in various available transportation funds and grants. General Fund Contributions Contributions from the General Fund are essential to ensure sufficient funding for certain critical infrastructure needs – particularly those that are not funded by enterprise or other restricted funding sources. Unfortunately, due to limited funds, the City has not been allocating adequate General Fund support to the CIP or R&R needs for many years. This will need to change to ensure that the City’s infrastructure, including parks and facilities, are properly maintained. The ten-year financial forecast, which was presented to the City Council at its March 4, 2025, meeting, assumed a CIP General Fund contribution of $3.0 million in FY 2025/26 and increasing that annual contribution by $0.25 million each year to reach $4.0 million in FY 2029/30, for a cumulative total of $17.5 million. However, it should be noted that $2.0 million of the recommended $3.0 million General Fund contribution for FY 2025/26 will now be going to R&R in the Facilities Renovation Fund to address certain critical maintenance needs, with the remaining $1.0 million going to the Miscellaneous CIP – General Fund, resulting in an updated five-year total of $15.5 million. Critical needs supported by the the $2.0 million allocation will address deferred maintenance for the Dolores Bengtson Aquatic Center, Fire Station 2, and Bernal Synthetic Fields, as discussed below. Funds will be held in the Facilities Renovation Fund, where resources are generally used for building and facility-related maintenance, and funds will be distributed to these three projects when the specific scopes and amounts have been determined. The anticipated five-year total contribution and other available resources remain insufficient to cover the $53.4 million in requested projects, meaning only the highest-priority projects (above the funding threshold) can be funded. When the AMP is completed later this year, the target number will increase, which will result in a much higher unfunded amount. Removing or re- allocating any additional General Funds from the available "pot" will severely impede the City's ability to undertake essential projects, leading to the deterioration of community assets, declining use, and increased future costs due to lack of proper repair and maintenance. Program Reserves and Future Funding Strategy In addition to the funds described above, the City maintains a General Fund CIP Reserve to address unforeseen emergencies and failures. The City’s General Fund CIP reserve is $1.2 million, which is inadequate to address these types of needs. Over the past two years, the City has canceled, defunded and reassigned $26.4 million in General Fund-dependent projects to address more urgent needs. In this cycle, staff is recommending an additional $2.4 million in deferrals because there are insufficient funds to meet ongoing operation and maintenance needs. Fully committing all available funds now will limit the ability to address future needs and will necessitate reprioritization when the AMP is Page 33 of 40