CITY COUNCIL REGULAR MEETING SUPPLEMENTAL MATERIAL 2-17-26

SUPPLEMENTAL MATERIAL 3 3. Do we know of other commercial properties at risk of Property Tax reassessment? (I’d think we would). And just confirming, that ‘risk’ is baked into the consultant’s estimates and our analysis? A. The numbers from the consultant reflect reassessments and appeals that were granted and are likely to be reflected in FY 2026/27. Based on pending cases, some projections were made on how much impact the additional reassessments stemming from appeals will have on the City’s Property Tax revenue. However, it is difficult to estimate how many appeals will be successful and which appeals will be heard each year. 4. Are we still anticipating the pension cost peak in ~7 years? A. Based on the latest information received from the CalPERS actuary, the City’s overall unfunded pension liability estimates are projected to decrease starting in FY 2029/30. It should be noted that CalPERS achieved investment returns higher than its target of 6.8 percent over the past two fiscal years. Unfunded pension liability estimates are highly dependent on annual investment returns and can fluctuate from year to year. 5. On the 10-yr Forecast, Use of Reserves ($349k in FY26, and $2M in FY27), can you please help me understand what account this is coming from? I presume Rainy Day / Capital Reserve account and not the Unallocated GF Reserve account? A. The Use of Reserves line represents the use of restricted program reserves and/or the Section 115 Pension Trust. For FY 2025/26, the adopted budget includes $0.35M from program reserves and $1.00M from the pension trust. The $0.35M in program reserves includes $0.29M from the COVID Response & Recovery Reserve and $0.06M from the Strategic Plan Implementation Reserve. With the recommended mid-year adjustment to no longer utilize $1.00M from the pension trust, we are left with $0.35M in program reserves. For FY 2026/27, $2.00M represents the use of the pension trust. Funds coming from the Capital Reserve Fund are reflected under the “Transfer - In” line item. 6. Vacancy rate 2->3%, risks? What has been our actual experience? Does this lend to hiring risk? A. Increasing the vacancy rate from 2.0% to 3.0% should not affect the city’s hiring based on the staff’s analysis of budgeted versus actual personnel costs over the past two years. The City’s personnel budget had 2.9% savings in FY 2024/25 and 4.1% in FY 2023/24.