HomeMy WebLinkAboutItem 7a. FY 2024-25 Q2 Budget Report Item 7a
Department: Finance
Cost Center: 2002
For Agenda of: 2/18/2025
Placement: Business
Estimated Time: 45 minutes
FROM: Emily Jackson, Finance Director
Prepared By: Riley Kuhn, Principal Budget Analyst
SUBJECT: REVIEW OF FISCAL YEAR 2024-25 2ND QUARTER BUDGET REPORT
RECOMMENDATION
1. Receive and file the 2nd Quarter Budget Report; and
2. Appropriate $9,167,831 in unassigned FY 2023-24 General Fund Balance as detailed
in the report; and
3. Appropriate $2,000,000 in assigned FY 2023 -24 assigned fund balance and authorize
an Additional Discretionary Payment to CalPERS of $3,308,870 ; and
4. Authorize a transfer of $274,700 in funding from the “Other Federal Grants” revenue
account (101-1005-45305) to the “Other Contract Services” expenditure account (101 -
1005-61013) to administer of the Department of Energy Buildings UP Prize Phase 2
Award (supporting mobile and manufactured home energy efficiency retrofits).
POLICY CONTEXT
The City’s budget policies require that the City Council review the City’s budget and
financial condition at least every six months. City Charter Code Section 804 states that at
any meeting after the adoption of the budget, the Council may amend or supplement the
budget by motion adopted by a majority vote of the Council.
The Second Quarter (Q2) Budget Review is part of the ongoing quarterly reporting
process and fulfills these requirements. The review allows the Council to adjust revenue
and expenditure assumptions should the need arise. The accompanying Q2 Budget
Report for FY 2024-25 provides a detailed review of the City’s financial results as
compared to the budget half -way through the fiscal year.
DISCUSSION
Budget Report Organization
The second quarter budget report is intended to provide a high-level overview of the City’s
performance against budget during the fiscal year. Additional emphasis is placed on those
areas where performance is expected to differ from budget for the full year. The report
also includes an update on the Capital Improvement Pro jects and Major City Goal Tasks
active during the quarter. The report (Attachment A) includes the following sections:
Page 201 of 494
Item 7a
General Fund Summary: Halfway through the year, two areas of risk to revenue budget
attainment have emerged. Sales tax has not grown as e xpected and development review
fees are in decline. Expenditures are trending broadly in line with expectations and at this
point, staff does not see risk to fund balance at year end.
Use of FY 2023-24 Fund Balance: The City’s Annual Comprehensive Financial Report,
including audited financial statements, was presented to Council on January 21, 2025.
The ACFR indicated General Fund unassigned fund balance of $9,167,831 as of June
30, 2024. In addition to funding for CVRA legal fees approved by Council on November
19, 2024, and an increased contribution to the San Luis Obispo Repertory Theater, staff
recommend prioritizing pension debt and infrastructure investments with the balance.
Storm Update: Consistent with prior quarterly reports, the report includes a summary of
costs incurred to date to address damage caused by the Winter 2023 storms. The report
also includes an update on the status of reimbursements expected from the Federal
Emergency Management Agency and California Office of Emergency Services.
Water Fund Summary: Year to date results are generally in line with budget and staff do
not expect significant variances to budget for the full year.
Sewer Fund Summary: Year to date results are generally in line with budget and staff
do not expect significant variances to budget for the full year.
Parking Fund Summary: Parking Fund revenue is trending below budget in the first half
of the year. This revenue shortfall is attributable to enforcement issues at certain parking
structures as a result of ongoing technology implementation efforts. Staff expect a
revenue shortfall for the full year, but do not expect any ongoing impact once the
technology issues are addressed.
Transit Fund Summary: Year to date results reflect lower than planned revenue for
federal grants. Certain grants included in the budget were not awarded, and staff will
reduce funding for the relevant projects accordingly.
Special Revenue Fund Summaries: All special revenue funds are expected to finish the
year in line with their budgets.
CIP Update: The report provides an update on the tasks ongoing or completed during
the second quarter of the year. Completed projects include North Broad St. Park and the
2023 Arterials project. Ongoing projects include the Laguna Lake Dog Park, Mission
Plaza Enhancements, and several water and sewer line replacements.
Major City Goal Update: The report provides an update on the Major City Goals tasks
originally scheduled to be completed during the second quarter of the year. One task was
originally scheduled to be completed last quarter, task 4.1c under Climate Action, Open
Space, & Sustainable Transportation to install solar panels at several City facilities. A
Power Purchase Agreement was signed during the quarter, and the panels are expected
to be operational by March of 2026.
Page 202 of 494
Item 7a
Federal Funding Summary
On January 27, 2025 the Federal Office of Management and Budget issued Memorandum
M-25-13, “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance
Programs”. That memorandum effectively halted a broad variety of federal payments , but
temporary restraining orders were issued to two separate U.S. District Judges to prohibit
the Executive Order from taking effect until future review and action by the courts. A
summary of the federal funding the City receives is included in Attachment B in order to
better understand the impact of any future federal action.
Department of Energy Green Buildings Upgrade (Buildings Up) Phase 1 Prize
In 2023, staff identified the Department of Energy (DOE) Buildings Upgrade (Buildings
UP) Phase 1 Prize as a funding source to implement the Climate Action Plan’s work
supporting voluntary energy efficiency and electrification retrofits in low-income
households. Staff submitted an application with the Diversity Coalition of San Luis Obispo
County (Diversity Coalition) and the Community Action Partnership of San Luis Obispo
(CAPSLO) (together, “the team”) to the prize and was selected as an award recipient.
The Buildings UP Prize is structured so that successful completion of Phase 1 makes the
Team eligible for Phase 2. In Fall of 2024, staff submitted an application for Phase 2
funding and after extensive review, DOE staff notified City staff on January 7, 2025, that
the City team has been awarded an addition $400,000 to complete Phase 2, which will
transition from initial research and analysis to a pilot phase that includes CAPSLO
receiving $125,300 to electrify space heating and water heating in up to ten additional
mobile homes and the City receiving $274,700 to extend the Green Building Analyst for
an additional year to oversee the Green and Healthy Homes program, continue and
expand helpline services for the community, provide matching funds for additional home
retrofits, extend technical consulting services for ongoing data monitoring and tracking,
and provide direct support to Diversity Coalition for ongoing outreach and stakeholder
meeting facilitation to ensure the program continues to meet local objectives. Staff’s
recommendation is to move the $274,700 of prize money currently in a revenue account
to an expense account so that staff my implement the prize and continue the work.
Previous Council or Advisory Body Action
Council adopted the FY 2024-25 Supplemental Budget on June 4, 2024. The First Quarter
Budget Review was presented to Council on December 10, 2024. On January 14, 2025,
Council directed staff to include an increased Additional Discretionary Payment to
CalPERS with the Second Quarter Budget Report.
Public Engagement
Public Engagement on the item can be provided to the City Council through written
correspondence prior to the meeting on through public testimony at the meeting. The
report will also be posted on the City’s website for public review.
Page 203 of 494
Item 7a
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended
action in this report because the action does not constitute a “Proje ct” under CEQA
Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2024-25
Funding Identified: Yes
Fiscal Analysis:
Staff recommend appropriation of FY 2023-24 General Fund unassigned fund balance of
$9,167,831 according to the audited financial statements as follows:
The amounts above are in addition to the $2,000,000 in General Fund Assigned Fund
Balance. Staff recommend total Additional Discretionary Payments as follows:
Additional information on each of the recommended uses can be found in Attachment A.
Page 204 of 494
Item 7a
ALTERNATIVES
Council could direct staff to use fund balance for another purpose. This action is not
recommended by staff because the recommendation is in line with policy and prioritizes
funding for upcoming infrastructure projects”
ATTACHMENTS
A - FY 2024-25 Second Quarter Budget Report
B - Federal Funding Summary
Page 205 of 494
Page 206 of 494
Q2 Budget Report Page 1
Second Quarter Financial Report
Fiscal Year 2024-25
Introduction
This financial report provides an overview of the City’s revenues and expenditures through the
first quarter of the fiscal year (July 1, 2024 – December 31, 2024). It also provides an update on
the status of the City’s Capital Improvement Plan (CIP) projects and progress on Major City Goal
tasks.
Throughout the document, reference will be made to the data available as of the time the report
was drafted. Revenues are often not available for up to two months after month-end and in some
cases, revenues are not received evenly throughout the year. Expenditures are often recorded in
advance for annual costs or for purchase orders opened at the beginning of the year. The net
impact is that actual results booked halfway into the year should not always be expected to equal
one half of budgeted amounts. Commentary will be provided only when analysis suggests that
full-year results may differ significantly from budget.
Table of Contents
General Fund Summary………………………………………………………………… 2
Use of FY 2023-24 Unassigned Fund Balance………………………………………. 5
Storm Update………………………………………………………………………. …… 9
Water Fund Summary…………………………………………………………………… 11
Sewer Fund Summary…………………………………………………………………... 13
Parking Fund Summary…………………………………………………………………. 15
Transit Fund Summary…………………………………………………………………... 17
Special Revenue Summaries…………………………………………………………… 19
CIP Update………………………………………………………………………….……. 25
Major City Goal Update…………………………………………………………………. 26
Page 207 of 494
Q2 Budget Report Page 2
General Fund Summary
Halfway through the year, two areas of risk to revenue budget attainment have emerged. Sales
tax has not grown as expected and development review fees are in decline. Expenditures are
trending broadly in line with expectations and, at this point, staff does not see risk to fund balance
at year end. The tables below detail year-to-date results as compared to budget and prior year
actuals. Commentary is provided where results are not in line with expectations.
Revenue:
Tax Revenue:
Sales Tax (including Local Revenue Measure & Prop 172 Safety Tax): Year-to-date results
include July through October only as the California Department of Tax and Fee Administration
reports with an up to two-month delay. The budget assumed a return to typical growth rates in
sales tax revenue driven by reductions in interest rates that are no longer expected to materialize.
Recent statewide forecasts from the City’s consultants have been revised downwards based on
macroeconomic conditions and, as a result, staff expects risk to budget attainment.
Property Tax: The City participates in the Teeter Plan, which means that the City is not exposed
to delinquent payments and can reasonably expect to collect 100% of budgeted amounts. Staff
expects to exceed budget by year-end.
Business Tax: This tax is due at the beginning of the year and should be largely collected. Staff
note that collections are up more than 5% from prior year due to a combination of improved
compliance efforts and collection of past-due prior year receipts. On January 31st, staff issued the
FY 2023-24 FY 2024-25
General Fund Actual Budget YTD Actuals % Received
Tax and Franchise Revenue 102,258,726$ 104,967,371$ 35,095,851$ 33%
Local Revenue Measure G 30,597,288 31,855,000 9,938,456 31%
Sales Tax (Bradley Burns)22,285,972 23,962,099 7,297,111 30%
Property Tax 23,723,431 23,446,385 4,971,853 21%
Transient Occupancy Tax 11,063,012 10,586,256 4,873,981 46%
Utility User Tax 6,301,505 6,622,639 2,732,613 41%
Business Tax 2,941,928 3,317,338 3,078,556 93%
Cannabis Tax 1,116,495 1,100,000 457,970 42%
Franchise Fees 2,366,286 2,091,800 660,694 32%
Gas Tax 1,341,857 1,419,353 864,854 61%
Safety Prop 172 520,952 566,500 219,762 39%
Fees and Other Revenue 18,829,578 22,233,056 8,431,109 38%
Development Review 6,168,815 6,585,331 2,240,330 34%
Parks & Recreation 2,413,314 2,068,787 1,069,348 52%
Fire 1,731,537 1,577,836 703,325 45%
Police 1,022,488 468,217 335,640 72%
General Government 7,493,423 2,800,598 4,082,467 146%
Storm Reimbursement - 8,732,287 - 0%
Total 121,088,304$ 127,200,427$ 43,526,960$ 34%
Page 208 of 494
Q2 Budget Report Page 3
first of three rounds of citations for past due business tax and expect collections to increase before
year end.
While other tax revenue categories show year to date results lower than 50%, staff does not
expect significant variances for the full year.
Fee & Other Revenue:
Development Review Fees: This revenue stream finished 2% below budget last fiscal year and
below target every month this fiscal year through the second quarter. Halfway through the year,
the Community Development Department has realized only 34% of the anticipated annual
revenue (approximately $1M below expectations). If Development Review Fees continue at this
rate, staff expect a $2M shortfall for the full-year. This downward trend in development and related
fees aligns with nationwide trends due to external factors such as high interest rates, political
uncertainty, and elevated construction, labor, land, and energy costs. This trend could also
suggest a leveling out of development in the City, after several years of development occurring at
a high pace due to several large-scale projects and the build-out of several subdivisions.
As a result of applications being down, Community Development is completing the vast majority
of plan checks in-house. This preserves the consultant budget, which would typically be expended
if there were more projects. The Director has directed program managers to pay close attention
to discretionary budgets for the remainder of the fiscal year. In addition, Community Development
will re-forecast the anticipated development revenue in the next financial plan, taking into
consideration the trends that have emerged this year.
General Government: This line includes earnings on cash and investment balances which have
benefited greatly from elevated interest rates. Staff expect cash interest payments to outperform
budget once again, although to a lesser degree due to recent policy actions by the Federal
Reserve. Staff also caution that if interest rates do not decrease throughout the year as expected,
this may result in negative fair market value adjustments1.
Storm Reimbursement: Staff’s original assumption was that the City would receive
reimbursement for Winter 2023 Storm expenditures from the Federal Emergency Management
Agency (FEMA) and the California Office of Emergency Services (CalOES) within 12 months.
That timeframe passed in October 2024 and the City has yet to receive reimbursement, despite
the fact that FEMA has obligated some of the City’s projects. Tremendous uncertainty remains as
to the timing and amount of reimbursement to be received and staff will revisit this assumption for
the 2025-27 Financial Plan. More information is included in the ‘Storm Update’ section of this
report.
Though other fee categories show year to date results other than 50% of budget, staff does not
expect significant variances for the full year.
Operating Expenditures:
1 Fair Market Value adjustments are non-cash adjustments to investment income that reflect changes in
the current market price of our bond holdings. Bond values are inversely correlated with interest rates, so
if interest rates do not fall as expected the adjustment will reduce revenue. If rates fall more quickly than
expected, the adjustment will increase revenue. Because the City generally holds investments until
maturity, we do not expect any cash impact from these changes in fair value.
Page 209 of 494
Q2 Budget Report Page 4
Staffing: Salaries and benefits are as expected at this point in the year at 46% expended. If
vacancies and overtime utilization continue at this rate, this indicates year end staffing savings of
roughly 5%. Staff will utilize these savings to ensure the work performed by vacant positions is
still completed wherever possible.
Unfunded Pension Liability: This annual cost is prepaid upfront. Savings are realized as a result
of this prepayment.
Contract Services: Actuals for this budget line include obligations on open purchase orders.
While 68% of budget has been obligated or expended, just 36% has been paid to vendors. Staff
do not expect a variance to budget at year-end.
Other Operating Expenditures: Similar to Contract Services, actuals for this line include
obligations on open purchase orders and just 17% of budget has been expended. Staff do not
expect a variance to budget at year-end.
While the year to date results for the General Fund as a whole are largely as expected, one area
of risk to operating budgets stands out:
Fire Department: Several vacant positions are driving higher than expected overtime
expenditures. Four firefighter positions are currently vacant, meaning at least one shift will be
filled at overtime rates daily. The department anticipates the positions will be filled by Spring,
allowing for a reduction in overtime. The department will utilize all means to reduce impacts to
the budget including the offset of unused regular salaries from the vacancies. Staff expects this
FY 2023-24 FY 2024-25
General Fund Expenditures Actual Budget YTD Actuals % Expended
Staffing 55,754,042$ 61,713,904$ 28,551,116$ 46%
Unfunded Pension Liability 12,994,935 12,886,419 12,682,728 98%
Contract Services 10,721,258 13,264,780 9,062,301 68%
Other Operating Expenditures 7,674,086 8,615,177 4,863,791 56%
Total 87,144,321$ 96,480,280$ 55,159,936$ 57%
FY 2023-24 FY 2024-25
Operating Expenditures by Department Actual Budget YTD Actuals % Expended
Admin/IT 10,767,778$ 12,200,996$ 6,708,995$ 55%
City Attorney 1,472,411 1,898,569 1,037,437 55%
Community Development 7,157,271 9,772,915 5,551,212 57%
CSG Admin 829,900 669,322 286,100 43%
Finance 2,275,677 2,661,555 1,489,151 56%
Fire 15,960,639 17,044,586 10,762,405 63%
Human Resources 2,179,463 2,043,612 1,154,727 57%
Non-Dept/Support Services 403,850 1,090,390 166,914 15%
Parks & Recreation 5,414,249 6,023,370 3,074,244 51%
Police 23,233,179 23,855,517 14,426,102 60%
Public Works 17,038,967 18,807,172 10,278,390 55%
Utilities 411,052 412,275 224,257 54%
Total 87,144,436$ 96,480,280$ 55,159,936$ 57%
Page 210 of 494
Q2 Budget Report Page 5
year’s increased mutual aid revenue resulting from the high fire activity around the state and other
reimbursements will provide budget capacity to cover staffing costs for the remainder of the year.
Recommended Use of FY 2023-24 Unassigned Fund Balance
The City’s Annual Comprehensive Financial Report, including audited financial statements, was
presented to Council on January 21, 2025. The report included the following table detailing
General Fund unassigned fund balance of $9,167,831 as of June 30, 2024:
In addition to the unassigned fund balance, the assigned balance includes General Fund balance
for purposes including:
115 Trust Fund: As part of the 2019-21 Financial Plan, the City Council identified establishment
of a 115 Trust Fund as a work task under the Fiscal Sustainability Major City Goal. Establishment
of the Trust was to be completed by February 2020 but was delayed due to uncertainty about the
budgetary impacts of COVID-19. The Trust was established in early 2023 and prior to its
establishment, $2 million was assigned in the General Fund (shown above) to be deposited to
the Trust upon establishment. In addition to the $2 million assigned for this purpose, staff had
planned to recommend allocation of $2.4 million of FY 2022-23 unassigned fund balance to make
an initial contribution to the Trust, but instead recommended allocation of that funding to the
Infrastructure Investment Fund to address increased infrastructure costs due to inflationary
factors. Despite $2 million being assigned for the 115 Trust, the City has not made an initial
contribution to the Trust. The $2 million could be deposited into the Trust, paid directly to
CalPERS, or unassigned and moved into the General Fund budget to support capital or operating
costs.
Page 211 of 494
Q2 Budget Report Page 6
Tenant Improvement: Funding for tenant improvements was assigned via Resolution No. 11203,
using funding that arose from passage of Local Revenue Measure in November, 2020. Originally
intended to be used for tenant improvements in the downtown area, this money has since been
used to fund Economic Development initiatives like the Buy Local Bonus program. The expected
balance of $608,000 at June 30, 2025 is expected to be drawn down entirely in the 2025-27
Financial Plan.
Financial Plan Fiscal Policies Section 8. sets the following prioritization for use of unassigned
General Fund balance:
a. Additional Discretionary Payments (ADP) to CalPERS
b. Infrastructure investments
c. Emerging Health and Safety needs of the community
In line with this policy, staff make the following recommendations for one-time use of FY 2023-24
unassigned fund balance:
California Voting Rights Act legal fees: Previously appropriated by Council on November 19,
2024.
Increased CalPERS Additional Discretionary Payment (ADP) amount: As previewed to
Council on January 14, 2025, staff recommend increasing the annual ADP amount based on
increases in salaries and wages since the City began making ADPs to CalPERS. This funding is
the amount above and beyond the $2,000,000 already assigned within Fund Balance, and the
total General Fund payment would be $2,660,859. Each fund’s ADP increase is calculated based
on its increases in salaries and wages since FY 2018-19 when the City began making these
payments, and if approved by Council, payments for the General Fund and Enterprise Funds will
be made in April with the City’s unfunded liability payments.
FY 2023-24 Unassigned Fund Balance*9,167,831$
Recommended uses:
CVRA legal fees 75,000
Increased CalPERS ADP amount 660,859
Additional SLO Rep funding 2,760,000
Final 1166 Higuera payment 845,000
Infrastructure Fund investments 4,826,972
Remaining Balance -$
*After $2M CalPERS ADP
Page 212 of 494
Q2 Budget Report Page 7
Additional SLO Rep funding: Based on Council direction during the hearing for adoption of the
FY 2024-25 budget, staff recommends assigning $2,760,000 in the General Fund balance to a
future contribution to the San Luis Obispo Repertory Theatre to support construction of the new
theater in the Cultural Arts District. This amount supplements $3,940,000 previously assigned in
the General Fund for this purpose.
Infrastructure Fund Investments: As called for by policy, staff recommend that the remainder
of the unassigned fund balance be transferred to the Infrastructure Investment Fund (IIF) for the
following purposes:
Final repayment of 1166 Higuera: As detailed in R-11459, $4,845,000 of the
Infrastructure Investment Fund (IIF) was appropriated to purchase 1166 Higuera Street.
Council approved reimbursement of $4,000,000 from the General Fund to the IIF with the
FY 2023-24 Second Quarter Budget Report, and staff are recommending that the
remaining $845,000 be transferred to the IIF with FY 2023-24 unassigned fund balance.
The General Fund will be reimbursed through a 30-year interfund loan between the
General Fund and the Parking Fund.
Additional Infrastructure Investments: Staff recommends that the remainder of
unassigned fund balance be transferred to the Infrastructure Investment Fund to
supplement existing funding in the IIF planned to be used for the Prado Bridge Widening
project or other projects.
Total CalPERS Additional Discretionary Payments: Staff recommend the following ADPs to
CalPERs, which have been increased on a one-time basis to reflect increased staffing costs since
the City began making these payments.
CalPERS ADP
General Fund 2,660,859$
Water Fund 245,418
Sewer Fund 250,875
Parking Fund 97,543
Transit Fund 15,973
Whale Rock 27,324
TBID 10,879
Total 3,308,870$
Page 213 of 494
Q2 Budget Report Page 8
Local Revenue Measure Fund Balance: In addition to the General Fund unassigned balance,
the Local Revenue Measure had a fund balance of $1,776,828 at the end of FY 2023-24. Staff do
not recommend appropriation of Local Revenue Measure Fund Balance since the balance is
expected to be necessary to offset revenue shortfalls in the current year. Appropriation of Local
Revenue Measure funds requires review and approval of recommendations by the Revenue
Enhancement Oversight Commission. The table below summarizes the Local Revenue Measure
revenue, uses, and fund balance in FY 2023-24:
CalPERS ADP
General Fund 2,660,859$
Water Fund 245,418
Sewer Fund 250,875
Parking Fund 97,543
Transit Fund 15,973
Whale Rock 27,324
TBID 10,879
Total 3,308,870$
Page 214 of 494
Q2 Budget Report Page 9
Storm Update
As noted in prior budget reports, the winter storms in January and March 2023 caused significant
damage to City infrastructure and resulted in emergency declarations at the Federal and State
level, in addition to the Emergency Services Director’s local emergency proclamation. The City
Council authorized use of up to $9 million from the City’s operating reserve in FY 2022‐23 and FY
2023‐24 to address unbudgeted storm costs, and with adoption of the 2023‐25 Financial Plan,
the City Council also allocated $2.75 million in the CIP to fund projects to repair storm damages
and mitigate against future damage. An additional $2.1 million was allocated to storm damage
repair with adoption of the FY 2024‐25 Supplemental Budget. The Federal and State declarations
enable the City to seek reimbursement for certain storm related costs. The maximum
reimbursement for eligible costs is 93.75% (75% from the Federal Emergency Management
Agency (FEMA) and 18.75% from the California Office of Emergency Services (CalOES)),
meaning that the City will pay a minimum of 6.25% for certain storm related costs.
The FEMA reimbursement process continues to move slowly due to turnover in the FEMA
Program Delivery Managers assigned to assist local agencies in submitting projects for
reimbursement and a lack of clarity about the information required in order to submit projects.
FEMA continues to be in a holding pattern for new obligations as the federal Disaster Relief Fund,
which funds public assistance to impacted agencies, has been expended due to a record number
of costly disasters. As of the writing of this report, Congress has still not taken action to replenish
the fund. As previously reported, the current lack of Federal funding is causing delays in projects
being obligated for funding, which is has impacted the timing of reimbursement. In the last several
weeks, the new Federal administration has signaled the possibility of disaster response shifting
to states. Given that, and discussion about a pause to Federal aid, staff continues to closely
monitor actions at the Federal level, as the ability to pay back the operating reserve and fund
future storm‐related projects is dependent on receiving reimbursement for incurred storm costs.
The City has expended approximately $15.7 million on storm response to date, including debris
removal, emergency protective measures, and projects to make permanent repairs to damaged
facilities. As noted in the prior quarter, total expenditures have not changed significantly from the
prior quarter because many projects are in the design phase. Storm related cost estimates
continue to shift as projects are scoped, designed and completed. Currently, the estimated total
cost to repair all storm related damage is $48.4 million, consistent with what was reported in the
FY 2024-25 Year-End Budget Report. As previously noted, all storm‐related expenditures have
been submitted to FEMA for reimbursement and are in various stages of FEMA’s review and
evaluation process.
Based upon staff delivery capacity, FEMA reimbursement timeframes, and the upcoming 2025‐
27 Financial Plan process, staff continues to work on the highest priority storm damage projects
in order to advance them for funding consideration with the 2025‐27 Financial Plan and will
continue the process to obtain FEMA reimbursement during the delivery process.
The two tables below provide an overview of the status of storm projects. The first table details
all storm projects that staff believes should advance, including their respective current phases
and the percentage of work completed to date. The second table outlines work that is not deemed
urgent at this time and will be assessed as part of the 2025-2027 Financial Plan to determine
priority and appropriate funding sources.
Page 215 of 494
Q2 Budget Report Page 10
Page 216 of 494
Q2 Budget Report Page 11
Water Fund Summary
The Water Fund’s year-to-date results are generally in line with expectations, showing expected
trends across revenue and expenditure categories.
Revenue:
Revenues are 45% received as of report drafting, which is in line with anticipated revenue
collection at this point in the fiscal year. Staff do not expect a significant variance in budget by
year end.
Investment and Property Revenue: This line includes earnings on cash and investment
balances. The fund has benefited from the current interest rate environment and exceeds its
revenue budget as budgets are set conservatively in case earnings on investments are low. The
higher interest earnings can help offset other revenue shortfalls, should they occur, and
strengthen the Water Fund’s financial position.
Other Revenue: The Other Revenue line item is primarily funded through revenues in the Other
City Licenses and Permits (recycled water construction water permits), Miscellaneous Penalties
(customer late fees), Sales of Surplus Property, Development Review Fees, and Utilities Setup
Fees. This line reflects an greater than expected revenues partially due to the timing of allocation
of a portion of Setup Fees and Miscellaneous Penalties (customer late fees) to the Sewer Fund,
as well as unbudgeted revenue from Sales of Surplus Property and Construction Water Permits.
Service Charges and Base Fees: Service Charges and Base Fees are currently showing an
under-collection, primarily due to a timing gap between the receipt of revenue and their allocation
in the accounting system. Specifically, sales to Cal Poly and Water Sales are impacted by this
timing delay, leading to a temporary misalignment in reported revenues. However, staff closely
monitor these collections and do not expect large variances to arise at the end of the fiscal year
after accounting for such delays.
State Grants: Funds received are attributable to a Proposition 1B Grant, which aligns with the
funding levels projected. These funds were received this fiscal year as a result of modified project
schedules. Staff are actively coordinating with the grant administrators to ensure compliance with
reporting and administrative requirements for disbursements.
Expenditures:
FY 2023-24 FY 2024-25
Water Revenue Actual Budget YTD Actuals % Received
Cal Poly Capacity & Resilience 233,025 263,433 271,026 103%
Investment and Property Revenue 1,759,115 50,000 818,233 1636%
Other Revenue 525,148 139,000 217,881 157%
Service Charges and Base Fees 26,088,324 28,102,022 11,450,519 41%
State Grants 613,814 - 22,946
Total 29,219,426$ 28,554,454$ 12,780,605$ 45%
Page 217 of 494
Q2 Budget Report Page 12
Staffing: As of the current reporting period, 42% of the staffing budget has been expended.
Budget savings are driven by multiple vacancies throughout the department, as unfilled positions
have temporarily reduced personnel costs. Some staffing savings are being spent on approved
staffing increases to address these vacancies, including outsourcing specific functions and
increasing one ¾ time employee to full time during an approved leave. The Fund remains on track
and within budget with these approved costs.
Unfunded Pension Liability: This annual cost is fully prepaid at the beginning of the fiscal year.
This prepayment strategy results in savings over the course of the year, as it reduces accruals
and maximizes the impact of the payment.
Contract Services: The Contract Services budget line reflects a significant portion of obligations
tied to open purchase orders, many of which are created at the start of the fiscal year for larger,
ongoing contracts. While 56% of the budget has been obligated or expended, just 32% has been
paid to vendors. Many contracts are structured around milestone-based payments or periodic
billing cycles, meaning payments lag behind the recorded obligations. Staff anticipates no
variance from the budget by year-end, as these expenditures align with the scope and timelines
of contracted services.
Other Operating Expenditures: Similar to the Contract Services category, the Other Operating
Expenditures line includes obligations tied to open purchase orders. This line also accounts for
significant annual prepayments for key water sources of supply, including Nacimiento, Salinas,
and Whale Rock. These prepayments ensure a stable and predictable supply of water, supporting
operational needs and reducing the risk of funding shortfalls. By making these payments upfront,
the organization safeguards against future cost increases or potential disruptions.
FY 2023-24 FY 2024-25
Water Expenditures Actual Budget YTD Actuals % Expended
Staffing 4,594,003$ 5,082,715$ 2,114,115$ 42%
Unfunded Pension Liability 833,466 789,926 779,802 99%
Contract Services 810,950 1,212,318 682,883 56%
Other Operating Expenditures 11,882,398 15,566,981 12,324,263 79%
Total 18,120,818$ 22,651,940$ 15,901,063$ 70%
Page 218 of 494
Q2 Budget Report Page 13
Sewer Fund Summary
The Sewer Fund’s year-to-date results are generally in line with expectations.
Revenue:
Investment and Property Revenue: This line includes earnings on cash and investment
balances. Budgets for investment income are set conservatively because changes in fair market
value could lead the City to recognize negative investment income.. The fund has benefited from
the current interest rate environment and now exceeds its revenue budget for this account line.
The higher interest earnings can offset other revenue shortfalls, should they occur, and strengthen
the Sewer Fund’s financial position.
State Grants: Funds received are attributable to a CalOES Grant at the Water Resource
Recovery Facility (WRRF) and aligns with the grant funding levels projected. These funds were
received this fiscal year as a result of modified project schedules. Staff are actively coordinating
with the grant administrators to ensure compliance with reporting and administrative requirements
for disbursements.
Other Revenue: Consistent with the first quarter, second quarter revenue is primarily attributed
to Industrial User Permits, where revenues are received as user permits expire, Miscellaneous
Penalties (customer late fees), and Utilities Set-up Fees. A small amount was also made up by
Administrative Citations, Credit Collections, Sales of Surplus Property, Development Review
Fees, and Sewer Wye Abandonment and Installations. Together, these sources provide
supplemental financial support to the budget, reflecting a diverse revenue base. Setup Fees and
Miscellaneous Penalties (customer late fees) are also impacted by the timing of Journal Entries
allocating a portion of these revenues from the Water Fund to the Sewer Fund
Long-Term Debt Proceeds: Borrowings associated with the long-term debt proceeds are
intended to fund the construction of the WRRF and were initially budgeted for FY 2023-24. The
timing of these borrowings is contingent upon the progress of construction activities, which may
not always align with the original budgetary projections. As a result, fluctuations in the timing of
debt issuance are being carefully monitored to ensure that financing remains available.
Service Charges and Base Fees: Similar to the Water Fund, Service Charges and Base Fees
show as under-collected in the second quarter due to a timing lag between revenue collection
and revenue allocation. Despite this temporary discrepancy, staff do not anticipate significant
variances in this revenue category by the end of the fiscal year.
FY 2023-24 FY 2024-25
Sewer Revenue Actual Budget YTD Actuals % Received
Cal Poly Capacity & Resilience - 472,534 472,534 100%
Investment and Property Revenue 2,592,653 50,000 1,331,463 2663%
Other Revenue 488,678 224,000 355,777 159%
Service Charges and Base Fees 19,893,378 20,052,366 7,239,897 36%
State Grants 887,167 - 210,683
Long Term Debt Proceeds 15,353,992 - 12,231,459
Total 39,215,868$ 20,798,900$ 21,841,812$ 105%
Page 219 of 494
Q2 Budget Report Page 14
Expenditures:
Staffing: At 40% expended, the primary driver of budget savings for the Sewer Fund is also
unfilled positions. These vacancies led to reduced personnel costs during the first and second
quarters of the fiscal year. Recognizing the importance of maintaining operational capacity and
service delivery, some staffing savings are being spent on approved staffing increases, including
outsourcing specific functions and internal promotions. Efforts to address the staffing gaps include
proactive recruitment campaigns, streamlining the hiring process to reduce time-to-hire, and
leveraging all available resources to attract and secure qualified candidates.
Unfunded Pension Liability: This annual cost is fully prepaid at the beginning of the fiscal year.
This prepayment strategy results in savings over the course of the year, as it reduces accruals
and maximizes the impact of the payment.
Contract Services: Actuals for this budget line include obligations on open purchase orders.
While 82% of the budget has been obligated or expended, just 39% has been paid to vendors.
Staff do not expect a variance to budget at year-end. The discrepancy is due to the timing of
payments, as many of the services are invoiced and paid after work is completed or milestones
are achieved.
Other Operating Expenditures: Like Contract Services, actuals for this line include obligations
on open purchase orders. As of the reporting date, 31% of the budget has been paid to vendors.
This approach safeguards budget stability and ensures that key expenditures can be met as
obligations are fulfilled.
FY 2023-24 FY 2024-25
Sewer Expenditures Actual Budget YTD Actuals % Expended
Staffing 4,558,064$ 5,113,385$ 2,045,712$ 40%
Unfunded Pension Liability 851,453 782,976 772,941 99%
Contract Services 1,256,919 1,345,978 1,101,160 82%
Other Operating Expenditures 2,647,401 2,874,769 1,481,230 52%
Total 9,313,836$ 10,117,108$ 5,401,042$ 53%
Page 220 of 494
Q2 Budget Report Page 15
Parking Fund Summary
The Parking Fund’s year-to-date results indicate that the fund will underperform its revenue
targets for the year. Additional analysis and commentary can be found below:
Revenue:
The revenue budget is based on the Rate Study report projections, with reduced rates effective
July 1, 2024. There were some unexpected failures in the technology systems associated with
parking revenue which resulted in less overall revenue in the first half of the fiscal year. It is
expected that the use of new technology recommended in the Technology Roadmap report will
help to address the current revenue shortfall when it is implemented at the end of the third quarter.
Long Term Parking: Revenue from long term parking includes sales of on-street permits,
residential district permits, and garage parking permits. The price of garage parking permits was
reduced from $85/month to $45/month effective July 1, 2024. The reduction in permit costs was
not forecasted in the Rate Study but was adopted by Council based on staff’s recommendations.
Permit sales have increased due to the price reduction but not to the extent anticipated when the
Rate Study was presented to Council. Permit sales are expected to continue to increase with the
launch of a new digital permit platform in Spring 2025, but it will likely not meet the revenue
projections presented in the Rate Study. Staff expects to miss budget by $402,000, based on
actuals through the first half of this year.
Parking Fines: Revenue from parking fines includes all revenue collected from paid parking
citations. Citation revenue has decreased due to collection issues caused by the existing citation
management vendor and staff turnover. Based on the Technology Roadmap recommendations,
the City is implementing a new citation management vendor starting in Spring 2025. With the
vendor change and updated noticing to those with unpaid citations, revenue is expected to
increase but not enough to meet budget.
Parking Meters: Revenue from parking meters includes hourly parking sessions from on-street
and surface parking lot areas as well as mobile app payments. Even with the reduced parking
rates, parking meter revenue is tracking slightly higher than budget. This provides a strong
indication that on-street parking activity is increasing with the reduced parking rates now in effect.
Staff does not expect significant variances to budget by year-end.
Parking Structures: Parking structures revenue has been negatively impacted by the operation
of a gateless parking system at the 842 Palm Street facility. In November 2024, Council approved
appropriation of $1.2 million in fund balance for the purchase of new garage payment and gating
equipment. New gating equipment will provide better access and revenue controls that staff
FY 2023-24 FY 2024-25
Parking Revenue Actual Budget YTD Actuals % Received
Long Term Parking 702,797 901,906 276,444 31%
Other Revenue 3,733,272 664,884 526,046 79%
Parking Fines 1,190,030 1,252,200 468,118 37%
Parking Meters 5,927,488 4,312,367 2,331,617 54%
Parking Structures 1,757,776 2,860,504 753,313 26%
Total 13,311,364$ 9,991,861$ 4,355,539$ 44%
Page 221 of 494
Q2 Budget Report Page 16
anticipates will increase revenue collections. The equipment at 842 Palm Street is scheduled to
be replaced in Spring 2025, but will not be in operation long enough to make up for revenue losses
in the current fiscal year. Staff expects to miss budget by $1,160,000, based on actuals through
the first half of this year.
Operating Expenditures:
Staffing: The staffing budget is 42% expended through the first half of the fiscal year due to
vacancies in multiple administrative and enforcement positions. These positions have since been
filled.
Unfunded Pension Liability: This annual cost is prepaid upfront. A slight savings is realized as
a result of this prepayment.
Contract Services: Actuals for this budget line include obligations from open purchase orders.
While 73% of the budget has been obligated or expended, just 36% has been paid to vendors.
Staff does not expect a variance to budget at year-end.
Other Operating Expenditures: This line includes utility services, credit card merchant fees, and
operational materials and supplies. So far, 46% of the budget has been expended. Due to lower
than budgeted revenues, staff expect savings of $99,000 in credit card merchant fees.
FY 2023-24 FY 2024-25
Parking Expenditures Actual Budget YTD Actuals % Expended
Staffing 1,735,699$ 1,849,702$ 782,391$ 42%
Unfunded Pension Liability 238,826 244,373 241,241 99%
Contract Services 862,591 782,601 573,733 73%
Other Operating Expenditures 967,528 965,304 465,947 48%
Total 3,804,644$ 3,841,980$ 2,063,311$ 54%
Page 222 of 494
Q2 Budget Report Page 17
Transit Fund Summary
The Transit Fund’s year-to-date results are generally in line with expectations. Staff note that the
Transit fund is heavily subsidized by Federal grants and it is unclear at this point how the new
administration’s actions will affect the availability of future discretionary funds.
Revenue:
Federal: This line includes capital and operating revenue from discretionary and formula grants.
Discretionary grants are competitive in nature and are included in the budget to offset related
capital and/or operating costs but are not guaranteed. Formula grant revenue is dependent on
the timing of capital expenditures and drawdowns needed to fund operations. In April 2024, staff
applied for a discretionary grant application for the purchase of additional battery electric vehicles.
The funding request was not awarded, so this revenue will not be received, and the project budget
will be reduced accordingly. The City continues to draw down on the American Rescue Plan Act
(ARPA) operating funds awarded to the City in 2022. Drawdowns occur quarterly to align with
federal reporting requirements. So far, only one drawdown is reflected in the table above.
Local (Bus Fare): This line includes fares paid on the bus, pass sales, and revenue from Cal
Poly’s Transit Service Agreement. Staff expects minimal variance at year-end.
Other / Interest Revenue: This line includes earnings on cash and investment balances.
Revenue from interest and investments are difficult to accurately estimate, so the Transit Fund
budgets conservatively for this line.
State: This line includes revenue from state and regional discretionary and formula funding
sources. The City received funding for multiple capital projects through the state’s Senate Bill (SB)
125 program. Staff expects to exceed the budget by $238,000 as a result of the SB 125 funding.
Expenditures
Staffing: This line is tracking below budget due to limited use of part-time staff. As a result, staff
anticipates a slight favorable variance at year-end.
FY 2023-24 FY 2024-25
Transit Revenue Actual Budget YTD Actuals % Received
Federal 3,486,773$ 12,469,861$ 334,279$ 3%
Local (Bus Fare)1,000,790 976,000 498,202 51%
Other / Interest Revenue 379,651 - 212,338
State 1,607,897 3,613,325 1,288,198 36%
Total 6,475,111$ 17,059,186$ 2,333,017$ 14%
FY 2023-24 FY 2024-25
Transit Expenditures Actual Budget YTD Actuals % Expended
Staffing 328,784$ 344,223$ 133,105$ 39%
Unfunded Pension Liability 57,283 45,725 45,139 99%
Contract Services 3,592,192 4,630,217 4,496,420 97%
Other Operating Expenditures 431,255 424,715 386,216 91%
Total 4,409,514$ 5,444,879$ 5,060,880$ 93%
Page 223 of 494
Q2 Budget Report Page 18
Unfunded Pension Liability: This annual cost is prepaid upfront. Savings are realized as a result
of this prepayment.
Contract Services: This line primarily consists of costs paid to a third-party contract for the
operations and maintenance of SLO Transit’s services. Actuals for this budget line include
obligations on open purchase orders. While 97% of budget has been obligated or expended, just
42% has been paid to vendors. Staff does not expect a variance to budget at year-end.
Other Operating Expenditures: Similar to Contract Services, actuals for this line include
obligations on open purchase orders. 47% of budget has been paid to vendors.
Page 224 of 494
Q2 Budget Report Page 19
Special Revenue Fund Summaries
Tourism Business Improvement District
The Tourism Business Improvement District (TBID) assessment is set at 2% of the lodging
industry’s gross receipts. The program annually aligns its operating budget with its anticipated
revenues.
Revenue:
While less than half of the budget has been recorded to date, revenue is recorded on a more than
one month delay and staff expect to collect the budgeted amount for the full year.
Expenditures:
The TBID procures many of its services in advance, leading to a high percent of budget expended
early in the year. The fund is expected to finish on budget for the full year.
Boysen Ranch Conservation Fund
Boysen Ranch consists of approximately 116 acres bounded by Los Osos Valley Road, Foothill
Boulevard, and O’Connor Way. The City holds a series of conservation easements that protect
approximately 25 acres of the Ranch to mitigate impacts to wetlands and waters caused by the
nearby commercial development projects on Los Osos Valley Road. As part of the original
easement agreement, Boysen Ranch’s owners provided the City with an endowment to fund
required monitoring activities.
Revenue:
The Boysen Ranch Conservation Fund is an endowment fund and its budgeted revenue is
provided by investment income. The fund is expected to benefit from the current interest rate
FY 2023-24 FY 2024-25
TBID Revenue Actual Budget YTD Actuals % Received
Tourism Assessment 2,267,304$ 2,117,251$ 974,610$ 46%
Other Revenue 56,643 - 24,242
Total 2,323,947$ 2,117,251$ 998,852$ 47%
FY 2023-24 FY 2024-25
TBID Expenditures Actual Budget YTD Actuals % Expended
Staffing 213,472$ 234,328$ 96,322$ 41%
Unfunded Pension Liability 43,573 32,234 31,821 99%
Contract Services 1,869,690 1,871,237 1,683,044 90%
Other Operating Expenditures 20,130 34,100 5,159 15%
Total 2,146,866$ 2,171,900$ 1,816,346$ 84%
FY 2023-24 FY 2024-25
Boysen Ranch Revenue Actual Budget YTD Actuals % Received
Investment Income 18,353$ 2,000$ 9,186$ 459%
Total 18,353$ 2,000$ 9,186$ 459%
Page 225 of 494
Q2 Budget Report Page 20
environment and meet or exceed its revenue budget, but this could change if fair market value
adjustments offset interest income received.
Expenditures
The fund has made its budgeted payment for authorized conservation activities. Staff expect no
further payments and the fund will finish on budget.
Insurance Fund
The Insurance Fund serves to pay the City’s annual premiums for liability, workers’ compensation,
special events, volunteer, and property insurance needed to protect the City and to manage
fluctuations in claims‐related expenses. It is also intended to maintain adequate reserves for
future claims and unpredictable increases in insurance costs.
Revenue:
Insurance Fund revenues are transfers in from the General Fund and will finish on budget.
Expenditures:
While recent actions to reduce premiums for Workers’ Compensation have delivered savings,
additional contributions from the General Fund may be necessary to build and maintain adequate
reserves according to City policy and actuarial estimates. The City’s Fund Balance and Reserve
Policy establishes that the Insurance Fund will maintain funding to cover 150% of the average
claim costs for the past five years. The policy also states that actuarial information will be taken
into consideration. Based on the most recent actuarial study dated November 18, 2024, the City
should maintain a reserve of $3,392,000 for liability claims and $1,578,000 for workers’
compensation claims, totaling $4,970,000, if funding at a 75% probability level. The insurance
fund reserve is anticipated to be $2,891,767 at the end of FY 2024-25. This is below the lowest
probability level provided by the actuary, which is 55%, or a reserve of $4,553,000.
FY 2023-24 FY 2024-25
Boysen Ranch Expenditures Actual Budget YTD Actuals % Expended
Contract Services 9,135 10,136 10,136 100%
Total 9,135$ 10,136$ 10,136$ 100%
FY 2023-24 FY 2024-25
Insurance Fund Revenue Actual Budget YTD Actuals % Received
Transfers In 6,333,317$ 6,000,000$ 3,000,000$ 50%
Total 6,333,317$ 6,000,000$ 3,000,000$ 50%
FY 2023-24 FY 2024-25
Insurance Fund Expenditures Actual Budget YTD Actuals % Expended
Contract Services 1,605,230$ 2,610,281$ 785,744$ 30%
Other Operating Expenditures 3,149,326 3,114,838 2,262,197 73%
Total 4,754,556$ 5,725,119$ 3,047,941$ 53%
Page 226 of 494
Q2 Budget Report Page 21
Public Safety Equipment Replacement Fund
The Public Safety Equipment Fund (PSEF) was created with the 2019‐21 Financial Plan to help
budget and forecast the replacement of Public Safety equipment that has expired or become
damaged. The Fund had received an original seed amount with the FY 2019‐20 budget and, going
forward, an annual allocation is made from the Local Revenue Measure.
Revenue:
The fund receives revenue in the form of transfers in from the General Fund and will finish on
budget.
Expenditures:
The fund budgets for replacement of public safety equipment currently in service and is expected
to finish the year on budget.
San Luis Ranch CFD
A Mello‐Roos Community Facilities District (CFD) was established and approved by City Council
on April 16, 2019 (Ordinance No 1661) pursuant to section 5.02 of the San Luis Ranch
Development Agreement. The boundaries of the CFD are identical to the San Luis Ranch Specific
Plan and includes 131.4 acres approved for up to 580 dwelling units and commercial
development, a 200‐room hotel, 100,000 square feet of office space, 150,000 square feet of retail
space, 7.8 acres of parks/ open space, and 52.3 acres of farmed agriculture land. The purpose
of the CFD is to fund major road improvements, potable and non‐potable water system
improvements, drainage system improvements, wastewater system improvements, solid waste
improvements, park and paseo improvements, open space improvements, and utilities.
Revenue:
FY 2023-24 FY 2024-25
Public Safety Fund Revenue Actual Budget YTD Actuals % Received
Transfers In 171,322$ 167,334$ 83,667$ 50%
Total 171,322$ 167,334$ 83,667$ 50%
FY 2023-24 FY 2024-25
Public Safety Fund Expenditures Actual Budget YTD Actuals % Expended
Other Operating Expenditures 601,116 404,020 277,667 69%
Total 601,116$ 404,020$ 277,667$ 69%
FY 2023-24 FY 2024-25
San Luis Ranch CFD Revenue Actual Budget YTD Actuals % Received
Property Tax 1,274,999$ 1,000,250$ 338,379$ 34%
Interest on Investment 592,271 - 16,399
Total 1,867,271$ 1,000,250$ 354,778$ 35%
Page 227 of 494
Q2 Budget Report Page 22
The fund collects property tax from residents under the Teeter Plan with the County and is
expected to finish the year on budget or better.
Expenditures:
The fund budgets for authorized expenditures, largely debt service, and is expected to finish the
year on budget.
Avila Ranch CFD
A Mello‐Roos Community Facilities District was established and approved by City Council on
October 24, 2017 (Resolution No 10844) pursuant to section 5.02.1 of the Avila Ranch
Development Agreement. The CFD boundaries are identical to that of the Avila Ranch
Development project and located at the northeast corner of Buckley Road and Vachell Lane. The
Avila Ranch Project will include up to 720 dwelling units, 15,000 square feet of office and retail,
18 acres of parks, 53 acres of open space, riparian corridors and farm ed agricultural land. The
CFD was formed with purpose of funding services as well as facilities of the CFD. Services to be
funded can include the maintenance and lighting of parks, parkways, streets, roads, and open
space; flood and storm protection services; police & fire protection services; maintenance and
operation of real property. Facilities to be funded can include park, recreation, parkway, and
open space facilities; construction and undergrounding of utilities (water, natural gas, telephone
lines, electric, cable television); for the acquisition, improvement, or rehabilitation of real property.
Revenue:
The fund collects property tax from residents under the Teeter Plan with the County and is
expected to finish the year on budget or better. Ye ar to date results include accruals for tax
payments to be made in April and are subject to change.
Expenditures:
FY 2023-24 FY 2024-25
San Luis Ranch CFD Expenditures Actual Budget YTD Actuals % Expended
Contract Services 9,145$ 22,043$ 16,061$ 73%
Debt Service 911,650 949,450 539,850 57%
Staffing - 26,530 - 0%
Total 920,795$ 998,023$ 555,911$ 56%
FY 2023-24 FY 2024-25
Avila Ranch CFD Revenue Actual Budget YTD Actuals % Received
Services Special Tax 232,761$ 477,025$ 492,030$ 103%
Facilities Special Tax 23,738$ 46,623 49,214$ 106%
Total 256,499$ 523,648$ 541,244$ 103%
FY 2023-24 FY 2024-25
Avila Ranch CFD Expenditures Actual Budget YTD Actuals % Expended
Authorized Services 58,758 363,416 132,357 36%
Total 58,758$ 363,416$ 132,357$ 36%
Page 228 of 494
Q2 Budget Report Page 23
The fund budgets for authorized services expenditures including maintenance, utilities, and
supplies, and is expected to finish the year on or under budget. Prior year actuals were lower than
budget due to the timing of services performed. Because the development is new, maintenance
costs are currently lower than revenues. At full buildout it is expected that costs to serve this
neighborhood will exceed revenue and the General Fund will provide services above and beyond
what the CFD pays for. All unexpended funds fall to fund balance and are available for expenditure
in future years
Page 229 of 494
Q2 Budget Report Page 24
CIP Update
During the second quarter of the fiscal year, the City continued to make significant progress in
delivering its Capital Improvement Program (CIP) projects. The capital summary table below
provides detail on completed and ongoing projects through the first two quarters, showcasing
efforts to enhance infrastructure, maintain critical systems, and improve community spaces.
Key projects completed during this period include the North Broad Park, Mitchell Park
Revitalization, and the Reservoir 2 Cover Replacement. These accomplishments underscore the
City's commitment to providing high-quality public facilities and ensuring long-term reliability of
essential infrastructure.
In addition to completed projects, construction resources are being put toward projects such as
the Mission Plaza Enhancements and the Cultural Arts District Parking Structure. Both projects
are in the City’s downtown core and are legacy projects which have been highly anticipated. Staff
continues to push projects towards construction, including the California Waterline Replacement
and 1106 Walnut tenant improvement projects, which are expected to go into construction in the
third quarter of this fiscal year.
Page 230 of 494
Q2 Budget Report Page 25
Oracle Account
Number Project Total Budget Estimated Construction
Completion Date Additional Comments
2001010-01 Cheng Park Revitalization $807,786.00 Completed
2000049 842 & 919 Palm Parking Structure
Repairs $2,538,989.00 Completed
2001050 Tank Farm Lift Station Discharge Pipe
Replacement Phase 2 $223,678.00 Completed
2000075-9.01 Corporation Yard Fuel Island and Wash
Station Rehabilitation $827,556.00 Completed
2000188 Mitchell Park Revitalization $471,253.00 Completed
2001001-14 Higuera St Crack Sealing $109,072.00 Completed
2091368 Reservoir 2 Cover Replacement $2,617,247.00 Completed
2091683 North Broad Park $1,533,939.00 Completed
2001065 2023 Arterials $9,823,766.00 Completed
2001069 Righetti Hillside Emergency Repair $1,540,000.00 Q3 FY 24-25 Project Closeout
2090742-10 Smith Augusta CMP Emergency Repair $850,000.00 Q3 FY 24-25 Project Closeout
2000034-03 Wash Water Tank #1 $753,807.00 Q3 FY 24-25 Final Punchlist
2000578 Johnson Waterline $5,204,444.00 Q3 FY 24-25 Final Punchlist
2091219 Wastewater Resource Recovery Facility $143,376,754.12 Q3 FY 24-25 Construction Ongoing
2000126 Water Treatment Plant Generator
Improvement Project at Facility 98 $3,527,523.00 Q3 FY 24-25 Construction Ongoing
2000075-06 Fire Station 4 Exterior Painting $55,000.00 Q3 FY 24-25 Construction Ongoing
2000168 Laguna Lake Dog Park $1,600,000.00 Q3 FY 24-25 Construction Ongoing
2000036-04 North Chorro Greenway Underbelly
Lighting $50,000.00 Q3 FY 24-25 Construction Ongoing
2000036-05 North Chorro Greenway Underbelly
Painting $60,000.00 Q3 FY 24-25 Construction Ongoing
2000075-07 Parking HVAC Replacement $260,000.00 Q3 FY 24-25 Construction Ongoing
2000615 2024 Sealing Project $3,000,000.00 Q4 FY 24-25 Construction Ongoing
2090649 Mid-Higuera Bypass $11,550,000 Q4 FY 24-25 Construction Ongoing
2000539-02 Sierra Way Waterline Replacement $2,766,449.00 Q1 FY 25-26 Construction Ongoing
2000545 California Waterline Replacement $1,550,505.00 Q1 FY 25-26
Construction Starting End of
January 2025
2091439 Mission Plaza Enhancements $3,729,574.00 Q1 FY 25-26 Construction Ongoing
2000561 Morro and Mill Sewer Replacement $2,800,000.00 Q1 FY 25-26 Construction Ongoing
2000577-04 1106 Walnut TI $2,000,000.00 Q1 FY 25-26 Project Advertising for Bids.
2000117 Cultural Arts District Parking Structure $ 47,000,000.00 Q3 FY 25-26
Construction Underway -
pouring structure decks
Completed & Ongoing Construction Capital Projects (July 2024-December 2024)
Page 231 of 494
Q2 Budget Report Page 26
Major City Goals Update
One Major City Goal task had an original completion date in the current quarter:
Climate Action, Open Space, & Sustainable Transportation | Implement the Climate Action
Plan and Lead by Example 2023-25 Work Plans | Strategic Approach 4.1c
Responsible Departments: Public Works & Administration
Original Completion Date: FY 2024-25 Q2 | Updated Completion Date: FY 2025-26 Q3
Complete installation of solar panels at the City’s Bus Yard, Fire Station 1, and Sinsheimer Pool
as called for by CAP Lead by Example task 1.1.A
Status Update: On September 4, 2018, Council authorized a solar Power Purchase Agreement
(PPA) to install solar panels at the above listed facilities. Under this agreement, the vendor would
install and own the solar panels and the City would only pay for energy consumed. The rates
contemplated by the initial agreement required installation at all sites simultaneously for efficiency.
The project was delayed prior to installation in 2019 in order to allow the City’s Bus Yard to
complete construction of its electric vehicle charging infrastructure project. That project was
completed in 2024. On October 17, 2024, the City Manager approved revised PPA’s for each of
the three facilities to account for the changing conditions from when the agreements were
originally authorized. In addition, a new PPA was approved for solar generation at the Cultural
Arts District Parking Structure.
Final diligence, design, and permitting efforts are currently underway. Construction is expected to
begin in October 2025 and the City expects to begin commercial operation in March 2026.
Oracle Account
Number Project
TOTAL ESTIMATED
PROJECT COST
(Construction Phase)
Estimated Construction
Start Date Additional Comments
2091252 Prado Road Bridge and Road Widening $28,210,000 Q2 FY 27-28
Working on regulatory permits
and 90% constuction
documents.
2091503 California and Taft Roundabout $4,000,000 Q2 FY 25-26
Right of way acquisition in
progress and finalizing design
documents.
2091613 Prado Road Interchange $124,000,000 Q2 FY 29-30
Starting final design phase of
project, awarding contract to
design firm.
2000522 Public Safety Center (1106 Walnut TI)$1,940,000 Q3 FY 24-25 (for 1106
Walnut work)
Consultant to analyze two site
option for public safety center
project and present
conceptual design for review.
Currently working on 1106
Tenant Improvement and Site
Security Fencing project.
Status of Major and Legacy Projects in Design
Page 232 of 494
Federal Funding Summary
Fiscal Year 2024-25
Office of Management and Budget (OMB) M-25-13
On January 27, 2025 the Federal Office of Management and Budget issued Memorandum M-25-
13, “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs”. That
memorandum required each federal agency to “Temporarily pause all activities related to
obligation or disbursement of all Federal financial assistance, and other relevant agency activities
that may be implicated by the executive orders, including, but not limited to, financial assistance
for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new
deal.”
This action would have become effective on January 28, 2025 at 5:00 PM, but temporary
restraining orders were issued by two separate U.S. District Judges to prohibit the Executive
Order from taking effect until future review and action by the courts.
The memorandum would have been available on the Whitehouse’s website at
https://www.whitehouse.gov/omb/information-for-agencies/memoranda/ but, like many federal
webpages, it is no longer available.
Impact on City Funding
Based on the language and legality of the memorandum, it is unclear what the impact to the City
would have been or will be. Staff still found it prudent to conduct an analysis of funding from
federal sources in order to better understand the City’s exposure to future federal action.
The table below shows the City’s direct exposure to federal funding:
Federal Revenue FY 2023-24 Actual FY 2024-25 Budget FY 2024-25 Actual
US DOJ Federal Grants 16,271$ 13,000$ -$
206-Law Enforce Grant Fund 16,271$ 13,000$ -$
FTA 5307 (Capital)684,498$ 3,575,985$ 269,119$
621-Transit Fund 684,498$ 3,575,985$ 269,119$
Other Federal Grants 3,244,755$ 9,151,879$ (159,514)$
101-General Fund 56,997$ 258,003$ 258,003$
205-CDBG Fund 385,483$ -$ -$
621-Transit Fund 2,802,275$ 8,893,876$ -$
FEMA Reimbursements (COVID)41,303$ -$ -$
101-General Fund 41,303$ -$ 108,532$
Federal Stimulus Grants 10,359,361$ -$ -$
505-Affordable Housing Fund 1,264,467$ -$ -$
405-Infrastructure Invest CIP Fund 9,094,894$ -$ -$
Total 14,346,188$ 12,740,864$ 218,137$
Page 233 of 494
As shown above, in the current year federal funding is primarily relied upon by the Transit Fund.
In prior years the City also received significant funding from the American Rescue Plan Act. This
funding is critical for important projects, including the following federally funded projects:
In addition to the direct exposure, the City partners with other agencies and organizations to fulfill
its service mission. These agencies, including the Community Action Partnership of San Luis
Obispo (CAPSLO), Transitions-Mental Health Association (TMHA), the County of San Luis
Obispo, the State of California, and many more, depend on federal funding to fulfill their missions.
Project Name Project Budget Remaining Budget Anticipated funding
2 Battery Electric Buses and
Associated Infrastructure 370,800 370,800
3 Battery Electric Buses and 1
Cutaway Bus 6,314,035 6,314,035
Broadband Plan 600,000 - 6,794,215
California & Foothill Railroad
Crossing Upgrade 384,799 52,117 800,000
Higuera Widening at 50 Higuera 297,316 67,500
ATP-South Broad Street Corridor 400,000
Transit Fleet Replacement: 2 Bus
Replacements 2,709,371 534,835
Transit Fleet Replacement: New
Protera/Flyer Buses 785,373 135,909
Building Electrification 75,000 75,000
Prado Road Bridge Widening 8,065,000 8,065,000
Grand Total 19,601,694 15,615,196 7,994,215
Page 234 of 494
Q2 Budget Report
February 18th, 2025
Recommendation
a)Receive and file the FY 2024-25 Second Quarter Budget Report; and
b)Appropriate $9,167,831 in unassigned FY 2023-24 General Fund Balance as
detailed in the report; and
c)Appropriate $2,000,000 in assigned FY 2023-24 assigned fund balance and
authorize an Additional Discretionary Payment to CalPERS of $3,308,870; and
d)Authorize a transfer of $274,400 in funding from “Other Federal Grants” revenue to
“Other Contract Services” expenditures to administer the Department of Energy
Buildings UP Prize Phase 2 Award (supporting mobile and manufactured home
energy efficiency retrofits)
Year to Date Revenue
Budget % Received Status
General Fund $127.2M 34%
Water $28.6M 45%
Sewer*$20.8M 46%
Parking $10.0M 44%
Transit $17.1M 14%
*% Received excludes unbudgeted long-term debt proceeds
Sales Tax Trend
$-
$10.0M
$20.0M
$30.0M
$40.0M
$50.0M
$60.0M
FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25
Expected
Shortfall
Development Fee Trend
$-
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
$8.0M
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Expected
Shortfall
Year to Date Operating Expenditures
Budget % Expended Status
General Fund $96.5M 57%
Water $22.7M 70%
Sewer $10.1M 53%
Parking $3.8M 54%
Transit $5.4M 93%
Storm Update
1.The City has expended approximately $15.7M on storm response to date
2.The estimated total cost to repair storm damage and mitigate against future
damage remains at $48.4M
3.All projects have been reviewed by City’s FEMA and CalOES liaisons and have
been submitted to FEMA for formal review and determination of eligibility
4.Delayed emergency permits from US Army Corps of Engineers
5.Disaster relief funds have been fully obligated nationwide
Federal Funding Exposure
•The January 27th “Funding Freeze” Executive Order and OMB memo introduced uncertainty
regarding Federal funding
•Greatest areas of exposure are:
•FEMA reimbursement for Winter 2023 storms
•Infrastructure projects including Prado Interchange, Broadband Plan, and roads
•Transit operating and capital budgets
•Partner agencies who are more heavily reliant on grant funding
Major City Goal Update
Q2 Deliverable: Delayed to FY 2025-26 Q3
Complete installation of solar panels at the City’s Bus Yard, Fire Station 1,
and Sinsheimer Pool as called for by CAP Lead by Example Task 1.1A
CIP Update: Q2 was a big quarter for parks
Highlights include two completed projects:
•North Broad St. Park
•Mitchell Park Revitalization
Ongoing projects include:
•Mission Plaza enhancements
•Cultural Arts District Parking Structure
•Laguna Lake Dog Park
Appropriation Recommendations
Recommended Use of Fund Balance
FY 2023-24 Unassigned Fund Balance*9,167,831$
Recommended uses:
CVRA legal fees 75,000
Increased CalPERS ADP amount 660,859
Additional SLO Rep funding 2,760,000
Final 1166 Higuera payment 845,000
Infrastructure Fund investments 4,826,972
Remaining Balance -$
*After $2M CalPERS ADP
Total CalPERS ADP by Fund
CalPERS ADP
General Fund 2,660,859$
Water Fund 245,418
Sewer Fund 250,875
Parking Fund 97,543
Transit Fund 15,973
Whale Rock 27,324
TBID 10,879
Total 3,308,870$
Recommendation
a)Receive and file the FY 2024-25 Second Quarter Budget Report; and
b)Appropriate $9,167,831 in unassigned FY 2023-24 General Fund Balance as
detailed in the report; and
c)Appropriate $2,000,000 in assigned FY 2023-24 assigned fund balance and
authorize an Additional Discretionary Payment to CalPERS of $3,308,870; and
d)Authorize a transfer of $274,400 in funding from “Other Federal Grants” revenue to
“Other Contract Services” expenditures to administer the Department of Energy
Buildings UP Prize Phase 2 Award (supporting mobile and manufactured home
energy efficiency retrofits)
Appendix
Pension Contributions
Payment Annual Amount Description
Regular Payments $6.0M Employer contribution made with each
paycheck
Unfunded Liability Payments $14.9M Required payment to address unfunded
liabilities
Additional Discretionary
Payment (ADP)$2.4 - 3.3M Optional payment made to accelerate
paydown of unfunded liabilities
CalPERS Additional Discretionary Payments by Fund
•% increase driven by changes in salaries & wages since first ADP was made