REPORT TO COUNCIL
SUBJECT
Title
Actions to Initiate Phase One of the Measure I Infrastructure General Obligation Bond Financing and Development Including (1) Approval of the Phase One Project List (2) Direct Staff to Undertake All Necessary Actions to Prepare for the Issuance of the First Series of Bonds in the Estimated Amount of $100 Million, (3) Establish the Measure I General Obligation Bond Debt Service Fund and the Measure I General Obligation Bond Projects Fund, and (4) Approve Related Budget Amendments
Report
BACKGROUND
On November 5, 2024, voters in the City of Santa Clara approved ballot Measure I, the Public Facilities and Infrastructure Bond Measure. Measure I authorizes the City to issue up to $400 million in general obligation bonds to help address over $600 million in unfunded infrastructure needs, including aging fire stations, storm drain systems, and aquatic facilities. As part of the process for putting Measure I on the ballot, the City Council approved a bond expenditure plan (Expenditure Plan), Attachment 1, describing the categories of public improvements authorized to be financed by the bonds and setting forth the basic terms for the implementation of bond-funded projects in phases.
City staff have identified priority projects within the Expenditure Plan to be funded by the first series of bonds under Measure I, which are anticipated to be issued in February 2026 (the “2026 Bonds”). These projects are outlined in the attached project list (Project List), Attachment 2.
DISCUSSION
Bond Compliance Oversight Committee Recommendation
The Bond Compliance Oversight Committee (Committee) is tasked with confirming that projects proposed to be funded using Measure I bond proceeds are contained in and consistent with the terms of the Expenditure Plan.
On August 27, 2025, the Committee approved an action determining that the Phase One Proposed Project List is consistent with the voter-approved Expenditure Plan for Measure I. The Committee also raised some comments and questions during its review, including the process for the selection of architectural and construction firms for the ISC Phase; concerns regarding the adequacy of funding allocated to Fire Station replacement projects; and interest in conducting site visits at Phase project locations.
Progress to Date
Since the passage of Measure I, City staff have been working with internal stakeholders to support efforts to advance existing and future programmed projects and activities. City staff have developed the Phase Project List with a description of each project drawn directly from the voter-approved Expenditure Plan.
Projects have been prioritized to balance readiness, community benefit, resource availability, and anticipated timeframes for completion. Additionally, staff have prepared estimates of the requested funding amounts and timelines for the initial bond issuance. Consistent with the terms of the Expenditure Plan, the factors considered in the development, sequencing, and timing of the initial Proposed Phase 1 Projects include:
a) the need to balance available staff and contractor resources.
b) the length of the planning, design, and construction phases of each project.
c) disruption to the public as City services and facilities are removed from service to undergo renovations.
d) legal requirements for the expenditure of Bond proceeds (in general, under current federal tax law, the City must expect to spend 85% of the proceeds of each series of Bonds within three years of their issuance date.
e) the timing and availability of alternate and supplemental funding sources.
f) local, regional, state or federal permitting requirements.
g) the need to coordinate with outside agencies.
Looking Ahead: Project Funding Timeline and Phasing
City staff recognizes concerns that projects may not appear to be prioritized or constructed quickly enough because of the amounts being allocated to certain projects. However, it is important to clarify that projects are scheduled intentionally, with bond funds sold and allocated in alignment with project timelines and cash flow needs. This approach ensures that tax-exempt bond proceeds are issued only when necessary to support design, permitting, or construction expenses, and within the required federal timeframes for expenditure. By phasing the sale of bonds to coincide with actual project needs, rather than issuing all funds upfront, the City preserves the tax-exempt status of the bonds while ensuring that resources are available precisely when construction dollars are required.
• Phase 1 Funding (2026): The initial bond sale (Series 1), totaling approximately $100 million, is anticipated in the first quarter of 2026.
• Phase 2 Funding (2028): The second bond sale (Series 2), planned for 2028, will be significantly larger and support several major projects moving from feasibility, design, and permitting into construction.
• Future Phase(s) Funding (2030+): One or more additional bond sales will occur after 2030, likely smaller in scale, to complete remaining or follow-up projects.
A summary of the proposed Phase 1 projects is set forth below:
Phase 1 Proposed Projects & Total Cost $98,634,500
(includes $2M in estimated bond issuance costs)
1. Streets and Transportation - $27,370,000
Street Resurfacing and Rehabilitation - $16,000,000
ADA Improvements - $5,000,000
Creek Trail Rehabilitation - $2,500,000
Bicycle Wayfinding - $300,000
Contingency/Escalation/Administration - $3,570,000
2. Fire Stations and Emergency Response - $12,285,450
Fire Station 5 Replacement - $4,000,000
Fire Training Tower Renovation - $783,000
Fire Station Security Upgrade - $1,900,000
Fire Station 7 Replacement - $4,000,000
Contingency/Escalation/Administration - $1,602,450
3. Police Facilities - $805,000
Real Time Intelligence Center (RTIC) Feasibility - $150,000
Police Training Facility Feasibility & Assessment - $250,000
Police Department Drone First Responder Infrastructure - $50,000
Emergency Operations Center Infrastructure - $250,000
Contingency/Escalation/Administration - $105,000
4. Parks, Library, Senior Center, and Aquatics Facilities - $38,438,750
Community ISC Aquatic Facility Renovation/Replacement (Phase 1) - $22,200,000
Community ISC Aquatic Facility Renovation/Replacement (Phase 2) - $2,000,000
Warburton Park Playground Renovations $3,000,000
Henry Schmidt Playground Renovations $4,325,000
Central Library Restrooms Remodeling & Access Control Redesign - $250,000
Central Library Lighting Control System Replacement - $250,000
Central Library Entry Auto Door System Replacement - $200,000
Central, Mission, and Northside Libraries Renovation Designs - $1,200,000
Contingency/Escalation/Administration - $5,013,750
5. Storm Drain System Improvements - $16,585,300
Storm Drain System Improvements - $5,000,000
Green Storm Drain Infrastructure Design & Construction - $6,645,000
Bowers Ave Underpass SDPS Rehabilitation - $2,030,000
SDPS Motor and Control Replacement - $347,000
Storm Drain Pump Station Outfall Reconstruction Program - $250,000
Storm Drain Renovations - $150,000
Contingency/Escalation/Administration - $2,163,300
6. Historic Buildings and Beautification - $1,150,000
Triton Museum Renovation - $1,000,000
Contingency/Escalation/Administration - $150,000
It is recommended that the City Council consider and take action to approve the Phase 1 Projects List, and, in so doing, affirm that said list is consistent with, and in full alignment with, the Expenditure Plan.
Public Works: Project Delivery, Readiness, and Phasing
The Public Works Department staff has been working internally and with stakeholders to identify projects that are ready for conceptual analysis, design, and/or construction.
Financing Process: Bond Issuance Timeline
The Finance Department is formulating a plan for the issuance of the 2026 Bonds to finance the Phase 1 Projects. The anticipated timeline of key milestones for the issuance of the 2026 Bonds is as follows:
• September 2025 - City Council consideration/approval of Phase 1 Project List
• Fall of 2025 - Update City’s Debt Management Policy
• November - December 2025 - Credit Rating Agency presentation and feedback
• December 2025 - January 2026 - Finalize bond structure and legal and offering documents, which will include a Preliminary Official Statement, which is the disclosure document to be used in the offering and sale of the 2026 Bonds
• January 2026 - City Council consideration/approval of legal and offering documents
• February 2026 - Bond sale, closing, and availability of funds for Phase 1 project reimbursement and implementation
It is recommended that the City Council direct staff to undertake all necessary actions to initiate the issuance of the 2026 Bonds in accordance with applicable law and Measure I. This includes the preparation of legal and offering documents and the engagement of professional services as required. Staff will bring forward the legal and offering documents for City Council review and approval prior to the sale of bonds.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is an administrative activity that will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT
The Phase 1 Projects will be funded from the issuance of the 2026 Bonds in the estimated principal amount of $100 million, which is currently projected to occur in February 2026. Several actions are recommended to allocate those funds to the bond projects. The debt service on the bonds will be paid from property taxes levied by the County and received by the City. The first debt service payment is expected to occur in FY 2026/27.
The establishment of a Measure I General Obligation Bond Projects Fund is recommended to account for the capital expenditures funded by the 2026 Bonds, and the establishment of a Measure I General Obligation Bond Debt Service Fund is recommended to account for the payment of debt service on the 2026 Bonds. The Source and Use Statements for these funds are included as Attachments 3 and 4.
In addition, budget actions are recommended to transfer the $2.0 million budgeted in FY 2025/26 for bond project implementation from the General Fund Non-Departmental budget to a new Measure I Bond Project Implementation project in the General Government Capital Fund. This appropriation will account for staff time and any other costs associated with managing the bond projects that are not charged directly to the individual bond projects. This will improve the tracking of costs from year to year and provide transparency on the total cost to deliver the bond program.
Following is a summary of the recommended budget actions. The individual bond projects under each bond expenditure category are listed in both the Discussion and Recommendation sections of this report.
FY 2025/26 Budget Amendments
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Measure I General Obligation Bond Projects Fund (613) |
|
Transfers From |
|
|
|
|
2026 Bond Proceeds |
$0 |
$96,634,500 |
$96,634,500 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
Streets and Transportation Projects (projects listed in the recommendation section below) |
$0 |
$27,370,000 |
$27,370,000 |
|
Fire Stations and Emergency Response |
$0 |
$12,285,450 |
$12,285,450 |
|
Police Facilities |
$0 |
$805,000 |
$805,000 |
|
Parks, Library, Senior Center, and Aquatics Facilities |
$0 |
$38,438,750 |
$38,438,750 |
|
Storm Drain System Improvements |
$0 |
$16,585,300 |
$16,585,300 |
|
Historic Buildings and Beautification |
$0 |
$1,150,000 |
$1,150,000 |
|
Total Expenditures |
$0 |
$96,634,500 |
$96,634,500 |
|
|
|
|
|
|
Measure I General Obligation Bond Debt Service Fund (413) |
|
Revenue |
|
|
|
|
Property Tax Assessments |
$0 |
$17,142,877 |
$17,142,877 |
|
Bond Proceeds |
$0 |
$100,000,000 |
$100,000,000 |
|
|
|
|
|
|
Expenditures/Transfers |
|
|
|
|
Administrative Costs |
$0 |
$2,000,000 |
$2,000,000 |
|
Transfer to Measure I General Obligation Bond Projects Fund |
$0 |
$96,634,500 |
$96,634,500 |
|
|
|
|
|
|
Ending Fund Balance |
|
|
|
|
Reserve for Debt Service |
$0 |
$17,142,877 |
$17,142,877 |
|
Reserve for Bond Projects Fund |
$0 |
$1,365,500 |
$1,365,500 |
|
|
|
|
|
|
|
|
|
|
|
General Fund (001) |
|
Expenditures |
|
|
|
|
Non-Departmental |
$40,861,319 |
($2,000,000) |
$38,861,319 |
|
Transfer to General Government Capital Fund |
$10,902 |
$2,000,000 |
$2,010,902 |
|
|
|
|
|
|
General Government Capital Fund (539) |
|
Transfer From |
|
|
|
|
General Fund |
$10,902 |
$2,000,000 |
$2,010,902 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
Measure I Bond Projects Implementation Project |
$0 |
$2,000,000 |
$2,000,000 |
COORDINATION
This report has been coordinated with the Finance Department, Public Works Department, and City Attorney’s Office
PUBLIC CONTACT
Public contact was made by posting the meeting 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. 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. Approve the Phase 1 Project List in the form presented to be developed using the First Series of Measure I General Obligation Bonds;
2. Direct Staff to undertake all necessary actions to prepare for the issuance of the First Series of Measure I General Obligation Bonds in an estimated amount of $100 Million;
3. Establish a Measure I General Obligation Bond Projects Fund (to account for the bond-funded capital expenditures), and establish a Measure I General Obligation Bond Debt Service Fund (to account for debt service payments on the general obligation bonds); and
4. Approve the following FY 2025/26 budget amendments:
a. In the Measure I General Obligation Bond Projects Fund, recognize a transfer of $96,634,500 from the Measure I General Obligation Bond Debt Service Fund and establish the projects listed below in the total amount of $96,634,500 (five affirmative Council votes required to appropriate additional revenue):
1. Street Resurfacing and Rehabilitation in the amount of $16,000,000
2. ADA Improvements in the amount of $5,000,000
3. Creek Trail Rehabilitation in the amount of $2,500,000
4. Bicycle Wayfinding in the amount of $300,000
5. Streets and Transportation - Contingency/Escalation/Administration in the amount of $3,570,000
6. Fire Station 5 Replacement in the amount of $4,000,000
7. Fire Training Tower Renovation in the amount of $783,000
8. Fire Station Security Upgrade in the amount of $1,900,000
9. Fire Station 7 Replacement in the amount of $4,000,000
10. Fire Stations and Emergency Response - Contingency/Escalation/Administration in the amount of $1,602,450
11. Real Time Intelligence Center (RTIC) Feasibility in the amount of $150,000
12. Police Training Facility Feasibility & Assessment in the amount of $250,000
13. Police Department Drone First Responder Infrastructure in the amount of $50,000
14. Emergency Operations Center Infrastructure in the amount of $250,000
15. Police Facilities - Contingency/Escalation/Administration in the amount of $105,000
16. Community ISC Aquatic Facility Renovation/Replacement (Phase 1) in the amount of $22,200,000
17. Community ISC Aquatic Facility Renovation/Replacement (Phase 2) in the amount of $2,000,000
18. Warburton Park Playground Renovations in the amount of $3,000,000
19. Henry Schmidt Playground Renovations in the amount of $4,325,000
20. Central Library Restrooms Remodeling & Access Control Redesign in the amount of $250,000
21. Central Library Lighting Control System Replacement in the amount of $250,000
22. Central Library Entry Auto Door System Replacement in the amount of $200,000
23. Central, Mission, and Northside Libraries Renovation Designs in the amount of $1,200,000
24. Parks, Library, Senior Center, and Aquatics Facilities - Contingency/Escalation/Administration in the amount of $5,013,750
25. Storm Drain System Improvements in the amount of $5,000,000
26. Green Storm Drain Infrastructure Design & Construction in the amount of $6,645,000
27. Bowers Ave Underpass SDPS Rehabilitation in the amount of $2,030,000
28. SDPS Motor and Control Replacement in the amount of $347,000
29. Storm Drain Pump Station Outfall Reconstruction Program in the amount of $250,000
30. Storm Drain Renovations in the amount of $150,000
31. Storm Drain System Improvements - Contingency/Escalation/Administration in the amount of $2,163,300
32. Triton Museum Renovation in the amount of $1,000,000
33. Historic Buildings and Beautification - Contingency/Escalation/Administration in the amount of $150,000
b. In the Measure I General Obligation Bond Debt Service Fund, recognize bond proceeds in the amount of $100,000,000, recognize property tax assessments in the amount of $17,142,877, establish the Administrative Costs appropriation in the amount of $2,000,000, establish a transfer to the Measure I General Obligation Bond Projects Fund in the amount of $96,634,500, establish a Reserve for Debt Service in the amount of $17,142,877, and establish a Reserve for Bond Projects Fund in the amount of $1,365,500 (five affirmative Council votes required to appropriate additional revenue);
c. In the General Government Capital Fund, recognize a transfer from the General Fund in the amount of $2,000,000 and establish a Measure I General Obligation Bond Projects Implementation appropriation in the amount of $2,000,000 (five affirmative Council votes required to appropriate additional revenue); and
d. In the General Fund, reduce the Non-Departmental appropriation by $2,000,000 and establish a transfer to the General Government Capital Fund in the amount of $2,000,000 (majority affirmative Council votes required).
Staff
Reviewed by: Marc Freitas, Deputy City Manager
Approved by: Jovan Grogan, City Manager
Attachments:
1. Expenditure Plan
2. Phase 1 Project List
3. Measure I General Obligation Bond Projects Fund Source and Use Statement
4. Measure I General Obligation Bond Debt Service Fund Source and Use Statement