REPORT TO COUNCIL
SUBJECT
Title
Discussion on the Allocation of Additional Funds in the General Fund Estimated for FY 2025/26, including Convention Center Capital Projects
Report
BACKGROUND
As reported in the Monthly Financial Reports during FY 2025/26, General Fund revenues are tracking above the budgeted levels and expenditures are expected to end the year below budget. A portion of this higher revenue and expenditure savings ($17.0 million) was assumed and programmed in the FY 2026/27 Adopted Budget. This included $13.9 million in the Proposed Budget that allowed additional investments, such as the transfer to the new Infrastructure Replacement Capital fund and funding for the Pension Trust contribution. As part of the FY 2026/27 budget adoption, an additional $3.1 million in fund balance was assumed, primarily from the carryover of unspent funds from FY 2025/26 to FY 2026/27.
Additional fund balance above the $17.0 million already programmed is expected by year-end. The April Monthly Financial Report (RTC 26-511) includes budget actions to set aside an additional $20.0 million generated from higher estimated revenues into a Reserve for Future Uses. Staff is requesting City Council feedback on the use of these funds.
At the public hearing on the adoption of the FY 2026/27 and FY 2027/28 Biennial Capital Budget on June 9, 2026, there was discussion and public feedback about the Senior Center membership fees and operations at the Senior Center. This report provides initial information to address the comments.
DISCUSSION
Potential Allocation of Additional Fund Balance
There is $20 million available for potential allocation by the City Council. These additional funds are considered one-time in nature as the higher FY 2025/26 collection levels have been factored into the FY 2026/27 revenue estimates.
Following are recommended expenditure categories for consideration:
• Transfer to the Infrastructure Replacement Capital Fund: Increase the transfer by $7.0 million (from $10.4 million to $17.4 million). This would bring the Infrastructure Replacement Capital Fund reserve to 5% of General Fund expenditures in FY 2026/27.
• Transfer to the Convention Center Capital Fund: Establish a transfer of $7.6 million to the Convention Center Capital Fund to fund priority projects in FY 2026/27. Capital needs of $13.8 million have been identified for the Convention Center over the next five years as described in Attachment 1. Given the significant capital needs for this facility, funding from the General Fund is recommended. Staff will also continue to work with OVG360 (Oak View Group), the Convention Center operator, to determine if there is any additional funding available from annual net income to support capital projects.
The potential allocation of $7.6 million would cover the FY 2026/27 capital needs as follows:
o Outdoor Marquee Project ($2.23 million)
o Security System Addition of Security Cameras and Access Control Measures ($1.4 million)
o Replacement of Electrical Switch Gear ($1.11 million)
o Fire Safety Updates ($655,000)
o Boiler Replacement ($500,000)
o Interior Paint Project - Main Lobby, Glass Pyramids, Great America and Mission Halls ($500,000)
o Exterior Paint Project Docks and Back Area ($450,000)
o Convention Center Maintenance Equipment Purchases ($354,865)
o Replacement of Exterior Tile Pavers - Second Floor Terrace ($200,000)
o Freight Elevator Hydraulic Pump and Power Unit Replacement ($127,687)
o LED Video Wall Installation - Main Lobby ($50,000)
o Convention Center Electrical Floor Box Assessment ($17,000)
• Increase the Capital Projects Reserve: Increase the Capital Projects Reserve by $5.4 million (from $12.5 million to $17.9 million). These funds would be available to address capital project needs throughout the City.
The additional funding is recommended to be allocated to address capital infrastructure needs given the significant backlog in this area. This use also adheres to the budget principle to allocate one-time funding sources to one-time uses. The City Council may determine other potential uses for the $20.0 million.
Senior Center Membership Fees and Operations
At that June 9th budget adoption Council meeting, staff presented information on Senior Center membership fees in response to questions from the May 19, 2026 budget study session. Senior Center operations are subsidized by the General Fund. In FY 2025/26, Senior Center revenue is projected at $356,000, including membership fees as well as senior recreation activities and classes. In comparison, the FY 2025/26 General Fund budget to operate the Senior Center and its programs totals $1.87 million, resulting in a budgeted cost recovery rate of approximately 19%.
Membership fees are broken down into basic fees ($12 per year) and premium fees ($37 per year). Non-residents can sign up for the basic membership which is assessed at the same rate as the premium resident rate. Non-residents are offered the basic membership to ensure that residents have maximum access to the additional premium programming, such as the drop-in fitness center and natatorium. There are currently 90 residents with the basic membership, 2,437 residents with the premium membership, and 19 non-residents. The resident premium memberships generate 98% of the annual membership revenue, which is estimated at approximately $92,000 based on the current enrollment.
Staff also presented the following benchmarking information. As shown below, approximately half of the cities charge an annual membership fee, and the premium resident rate for Santa Clara is mid-range of the resident rates charged by other cities.
|
SENIOR CENTER ANNUAL MEMBERSHIP FEES |
|
City |
Resident Rate |
Non-Resident Rate |
Premium Resident Rate |
|
Santa Clara |
$12 |
$37 |
$37 |
|
Campbell |
$25 |
$35 |
NA |
|
Cupertino |
$25 |
$35 |
NA |
|
Sunnyvale |
$40 |
$60 |
NA |
|
Milpitas |
$15 |
$35 |
NA |
|
Los Gatos |
$45 |
$45 |
NA |
|
Saratoga |
$45 |
$45 |
NA |
|
|
|
|
|
|
Average |
$30 |
$42 |
NA |
|
(All Cities) |
|
|
|
|
Average |
$33 |
$43 |
NA |
|
(w/out Santa Clara) |
|
|
|
|
|
|
|
|
|
SENIOR CENTERS IN SANTA CLARA COUNTY WITH FREE ANNUAL MEMBERSHIP |
|
Mountain View |
$0 |
$0 |
NA |
|
Palo Alto |
$0 |
$0 |
NA |
|
Los Altos |
$0 |
$0 |
NA |
|
Gilroy |
$0 |
$0 |
NA |
|
Morgan Hill |
$0 |
$0 |
NA |
|
San Jose |
$0 |
$0 |
NA |
|
|
|
|
|
|
Overall Average |
$16 |
$22 |
NA |
|
(All Cities) |
|
|
|
|
Overall Average |
$16 |
$21 |
NA |
|
(w/out Santa Clara) |
|
|
|
There was also discussion about the Senior Center operations, including the hours available for the pool. Currently, the Senior Center pool is open Monday through Thursday from 8 a.m. to 1 p.m., Monday and Wednesday from 4 p.m. - 6:30 p.m., and Saturday from 8:30 a.m. - 11:30 a.m., for a total of 28 hours per week. Prior to the pandemic, the pool was open Monday through Thursday from 7 a.m. to 1:30 p.m. and from 3 p.m. - 6:30 pm, Friday from 7 a.m. - 1:30 p.m. and 3 p.m. - 4:30 p.m., and Saturday from 9 a.m. - 11:30 a.m. for a total of 50.5 hours per week.
The hours are currently below pre-pandemic levels due to regional and local aquatic staffing challenges. There has also been a nationwide lifeguard shortage in recent years with approximately one-third of the country’s public swimming pools affected by reduced hours or closures. Prior to the pandemic, the aquatics program employed 30 as-needed lifeguards year-round and 60 as-needed lifeguards during the summer season. Currently, the Parks and Recreation Department is operating with approximately 12-15 as-needed lifeguards year-round and 45 lifeguards during the peak season. Staff will continue to work to recruit and retain lifeguards, including working with the Human Resources Department to review lifeguard wages. Other staffing models may also be considered, including the addition of full-time lifeguard staff.
Staff is also working on the Senior Center Natatorium HVAC project, and an agreement for the HVAC rehabilitation is expected to be brought forward for City Council approval on July 14, 2026. In the future, the Public Facilities and Infrastructure Bond Measure (Measure I) will provide funding of $9.5 million for the Senior Center Expansion/ Rehabilitation project that will be budgeted in a future bond funding phase/tranche.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(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 potential significant physical impact on the environment.
FISCAL IMPACT
The April Monthly Financial Report allocates $20.0 million of additional General Fund revenue to a Reserve for Future Uses. These funds are available for allocation by the City Council.
The final reconciliation for FY 2025/26 will be brought forward for City Council consideration as part of the FY 2025/26 Budgetary Year-End Report planned for December 2026. It is anticipated that a modest amount of additional fund balance will be available for allocation at that time.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
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 clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Review and provide input on the potential allocation of the $20.0 million Reserve for Future Uses in the General Fund; and
2. Direct staff to return with budget actions and/or additional follow-up at a future Council meeting.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENT
1. Convention Center Five-Year Capital Improvement Program Project Detail