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HomeMy WebLinkAbout04-07-2026 FIC Regular Meeting Agenda PacketApril 07, 2026 Dublin Finance and Investment Committee Agenda 1 COMMITTEE MEMBERS Kashef Qaadri, Councilmember Michael McCorriston, Councilmember Regular Meeting of the CALL TO ORDER AND PLEDGE OF ALLEGIANCE 2. PUBLIC COMMENT 3. ACTION ITEMS 3.1 The Committee will consider approval of the minutes of the March 3, 2026 Regular Finance and Investment Committee Meeting. Approve the minutes of the March 3, 2026 Regular Finance and Investment Committee Meeting. March 3, 2026 Regular Finance and Investment Committee Meeting Minutes REPORTS 4.1 The Finance and Investment Committee will receive a summary of the Preliminary two-year General Fund budget, which will include a detailed review of the City’s maintenance agreement with MCE Corporation. Receive the report. Staff Report REQUEST FOR FUTURE MEETING AGENDA ITEMS The Committee and/or City Staff will present items to be discussed at future meetings. ADJOURNMENT This AGENDA is posted in accordance with Government Code Section 54954.2(a) 1 April 07, 2026 Dublin Finance and Investment Committee Agenda 2 If requested, pursuant to Government Code Section 54953.2, this agenda shall be made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Section 12132) (ADA), and the federal rules and regulations adopted in implementation thereof. To make a request for disability-related modification or accommodation, please contact the City Clerk’s Office (925) 833-6650 at least 72 hours in advance of the meeting. Upon receiving a request, the City will swiftly resolve requests for reasonable accommodation for individuals with disabilities, consistent with the federal ADA, and resolve any doubt in favor of accessibility. Agenda materials that become available within 72 hours in advance of the meeting, and after publishing of the agenda, will be available at Civic Center, 100 Civic Plaza, and will be posted on the City’s website at www.dublin.ca.gov/ccmeetings. Mission The City of Dublin promotes and supports a high quality of life, ensures a safe, secure, and sustainable environment, fosters new opportunities, and champions a culture of equity, diversity, and inclusion. 2 Agenda Item 3.1 COMMITTEE MEMBERS Kashef Qaadri, Councilmember Michael McCorriston, Councilmember Tuesday, March 3, 2026, Finance and Investment Committee Minutes 1 MINUTES OF THE FINANCE AND INVESTMENT COMMITTEE REGULAR MEETING Tuesday, March 3, 2026 – 5:30 p.m. A regular meeting of the Finance and Investment Committee was held on Tuesday, March 3, 2026 at the Civic Center, located at 100 Civic Plaza, Dublin, CA 94568. The meeting was called to order at 5:30 p.m. CALL TO ORDER AND PLEDGE OF ALLEGIANCE PRESENT: Councilmember Kashef Qaadri and Councilmember Michael McCorriston ABSENT: None PUBLIC COMMENT None. ACTION ITEMS Approval of the February 3, 2026 Regular Finance and Investment Committee Meeting Minutes ACTION: By consensus, the Committee approved the minutes of the Regular Meeting of February 3, 2026. REPORTS 4.1. Phased Adjustments to Sports Field Use Fees for Grass Athletic Fields The Committee received a report on the proposed adjustments to the grass athletic field use fees from Parks and Community Services Director Jackie Dwyer. The Committee discussed the proposed fees and the implementation of the changes. The Committee received the report. REQUEST FOR FUTURE MEETING AGENDA ITEMS None. ADJOURNMENT The meeting adjourned at 6:03 p.m. 3 Tuesday, March 3, 2026, Finance and Investment Committee Minutes 2 Minutes prepared by Wendy Lam, Accounting Manager. Councilmember Qaadri ATTEST: ________________________________ Finance Director 4 Agenda Item 4.1 STAFF REPORT FINANCE AND INVESTMENT COMMITTEE Page 1 of 9 DATE: April 7, 2026 TO: Honorable Committee Members FROM: Hazel Wetherford, Deputy City Manager SUBJECT: Preliminary Budget for Fiscal Years 2026-27 and 2027-28 Prepared by: Jay Baksa, Finance Director EXECUTIVE SUMMARY: The Finance and Investment Committee will receive a summary of the Preliminary two-year General Fund budget, which will include a detailed review of the City’s maintenance agreement with MCE Corporation. STAFF RECOMMENDATION: Receive the Report. FINANCIAL IMPACT: In Fiscal Year (FY) 2026-27, the Preliminary Budget reflects total General Fund revenues of $136,516,522 and total expenditures of $125,731,216; and in Fiscal Year 2027-28, revenues of $138,360,589 and expenditures of $130,609,746. Transfers out to Capital Improvement Program projects and contributions to Internal Service Funds total $7,200,000 and $3,850,000 in FY 2026-27 and FY 2027-28, respectively. This will result in net increases to the General Fund Reserves of $3,585,306 and $3,900,843 in FY 2026-27 and FY 2027-28, respectively. Based on the updated 10-Year Forecast, the projected operating deficit continues to show in Fiscal Year 2030-31. DESCRIPTION: The City of Dublin utilizes a biennial budget process, in which a comprehensive budget document is prepared that establishes high-level priorities and specific departmental goals for a two-year period. The second year of the cycle is the "update year," in which projections are revised and changes highlighted. This year’s budget cycle represents the first year of th is process. 5 Page 2 of 9 The focus of this report will be the General Fund, as no major budgetary changes are proposed in other funds. Also included is the updated 10 -Year General Fund Forecast (10- Year Forecast), which provides context for the two-year budget proposals. The Proposed Budget balances in both Fiscal Year (FY) 2026-27 and FY 2027-28, with a General Fund operating surplus of $10,646,571 and $7,609,333 in each year, respectively, before contributions to capital improvement projects and preventative maintenance. After transfers, the result is a net increase to reserves of $3,585,306 in FY 2026-27 and $3,900,843 in FY 2027-28. Changes by category are explained in the section below, focusing on major categories, and include the assumptions used in the City’s 10-Year Forecast. REVENUES Property Tax Fiscal Year 2026-27 - Increase of $1,984,525 (3.0%) Fiscal Year 2027-28 - Increase of $3,414,815 (5.0%) Property tax revenues are based on projections from the City’s property tax consultant, incorporating a 2.0 percent annual Consumer Price Index (CPI) adjustment to assessed property value (the maximum permitted under Proposition 13), as well as increases in valuation from home sales and new construction. New construction activity and home sales have slowed in recent years and are expected to continue at a modest pace in FY 2026–27, with assessed property value projected to grow by 3.27 percent. Beginning in FY 2027–28 and through Year 5 of the 10-Year Forecast, assessed valuation growth is projected at 5.00 percent annually, d riven by new development, a projected increase in home sales, and new construction coming to market. This incorporates a 2.0 percent CPI adjustment on existing non-Proposition 13 homes and anticipated transfer of ownership activity. Growth is projected at 2.50 percent annually in Years 6 through 10. A delinquency rate of 1.0 percent has also been applied. Sales Tax Fiscal Year 2026-27 - Increase of $358,636 (1.3%) Fiscal Year 2027-28 - Increase of $838,691 (3.0%) Based on continued economic uncertainty and evolving global conditions, Dublin’s sales tax revenue forecast has been revised slightly downward since the last quarter. Despite this revision, sales tax revenue is still anticipated to increase in both FY 2026-27 and FY 2027-28 compared to FY 2025-26 Amended Budget. Consumer spending continues to fluctuate as households navigate higher prices and ongoing uncertainty, with the Auto Sector projected to be particularly affected. The City’s December quarter results will be available in mid-April, and any further revisions will be reflected in the Preliminary Budget report to the City Council. Looking ahead, the 10-Year Forecast assumes annual growth of 3.0 percent in Years 3 and 4, and 2.5 percent in Years 5 through 10. All revenue sharing agreements have been factored into these projections. 6 Page 3 of 9 Development Fiscal Year 2026-27 - Increase of $223,468 (2.3%) Fiscal Year 2027-28 - Decrease of $1,454,211 (14.3%) Development revenue includes permitting fees and payments for planning and engineering services provided by the City. Projections are based on the timing of development projects, coordinated between City staff and developers. Revenue is estimated to increase slightly in FY 2026-27 relative to the FY 2025-26 Adjusted Budget, before declining in FY 2027-28 as active development projects near completion. It should be noted that revenues and their corresponding costs are not realized simultaneously. Plan check costs are typically incurred approximately 12 months after revenue is received, meaning that as development activity decreases, the associated reduction in costs will trail accordingly. In anticipation of this, the City has maintained the Service Continuity Reserve, currently at $3.2 million, to cover costs during that period. Looking ahead, the 10-Year Forecast projects development revenue to remain flat in Years 3 and 4, followed by steady declines from Year 5 through Year 10 as the community approaches build-out. Other Taxes Fiscal Year 2026-27 - Increase of $182,545 (2.5%) Fiscal Year 2027-28 - Increase of $185,980 (2.5%) Other Taxes include Property Transfer Tax and various franchise fees covering electric, gas, garbage, and cable services. Revenue in both fiscal years is projected to increase primarily due to the annual garbage rate adjustment established in the franchise agreement, as well as increases in gas and electric rates. Property Transfer Tax revenue remains closely tied to housing market conditions and has stayed near a 10-year low, reflecting subdued property sales activity. Cable franchise fee revenue has continued its gradual decline over the past decade driven by cord-cutting trends. The 10-Year Forecast projects overall annual growth of 3.0 percent, reflecting the steady rate adjustments in utility franchise fees offsetting the continued softness in transfer tax and cable revenues. Charges for Services Fiscal Year 2026-27 - Increase of $717,544 (10.2%) Fiscal Year 2027-28 - Increase of $64,138 (0.8%) Charges for Services revenue is derived predominately from Parks and Community Services (PCS) programs. The projected increase in FY 2026-27 reflects the following: 7 Page 4 of 9 Increases:  Opening of the Dublin Arts Center  Addition of a ninth after-school program site  The Wave fee adjustment  Addition of new Special Event programming, including the Night Market and Community Garage Sale Decreases:  Lower than projected attendance in the Jr. Warriors program  Loss of major contract vendor (Skyhawks)  Reduced Preschool enrollment The more modest growth projected in FY 2027-28 reflects a stabilization of PCS revenue following the FY 2026-27 expansions. Non-PCS Charges for Services revenue includes administrative fees collected from contracted garbage collector Amador Valley Industries, projected to increase 5.0 percent consistent with the franchise agreement, and emergency response reimbursements from the County for services at Santa Rita Jail, which are projected to remain flat. The 10-Year Forecast assumes 2.0 percent annual growth across all Charges for Services revenue. Interest Fiscal Year 2026-27 - Decrease of $2,976,400 (28.1%) Fiscal Year 2027-28 - Decrease of $1,295,400 (17.0%) Staff and the City’s consultants anticipate that interest rates will decline over the next two years, though uncertainty remains regarding the timing and magnitude of potential Federal Reserve rate adjustments. Given this uncertainty, Staff has taken a conservative approach to forecasting interest revenue. The projected decrease of $2.97 million in FY 2026-27 is driven primarily by the planned drawdown of General Fund reserves to support Capital Improvement Program (CIP) expenditures, as well as anticipated rate cuts, bringing projected interest revenue in line with the FY 2025–26 Adopted Budget. A further decline of approximately $1.29 million (17.0 percent), is projected in FY 2027-28, reflecting continued CIP spending and additional anticipated rate reductions. Staff will continue to monitor Federal Reserve actions in coordination with City consultants and adjust projections as needed throughout the fiscal year. Looking ahead, the 10-Year Forecast projects interest revenue to remain flat in Years 3 and 4, followed by annual decreases thereafter as the City draws down planned General Fund Reserve spending and interest rates continue to decline. Rentals and Leases Fiscal Year 2026-27 - Increase of $303,045 (13.9%) Fiscal Year 2027-28 - Increase of $60,500 (2.4%) 8 Page 5 of 9 The FY 2026-27 increase is primarily driven by strong demand for field and court rentals and Shannon Community Center rentals, as well as revenue associated with the opening of the Dublin Arts Center. It should be noted that these projections do not reflect the proposed field rental fee adjustments included in the Master Fee Schedule update, currently scheduled for City Council consideration on April 7, 2026. Revenue projections for FY 2027 -28 include a 5.7 percent increase in field and court rental revenue, with all other rental catego ries remaining flat. Should the proposed fee increases be approved, Staff will monitor their impact on usage and adjust future projections accordingly. The 10-Year Forecast assumes 3.0 percent annual growth, with revenue projections to be reevaluated as the effect of any fee adjustments on utilization becomes clearer. Other Revenue Fiscal Year 2026-27 - Decrease of $607,070 (17.8%) Fiscal Year 2027-28 - Increase of $26,780 (1.0%) Other Revenue encompasses a wide range of sources, including property sales, sponsorships, donations, and reimbursements. Due to the variable nature of these revenues, Staff budgets only known payments and recurring items, incorporating adjustments as additional revenues are received. Both fiscal years include reimbursements for work performed at Camp Parks through the Intergovernmental Support Agreement (IGSA), reimbursable work for Dublin San Ramon Services District, and PCS sponsorships and contributions. The FY 2026–27 projection is in line with the FY 2025–26 Adopted Budget, reflecting a $150,000 year-over-year increase. The decrease relative to the FY 2025-26 Amended Budget is attributable to a mid-year budget adjustment that included $749,000 in one-time tax credit revenue. The 10-Year Forecast assumes 3.0 percent annual growth, consistent with the recurring and stable nature of the revenue sources budgeted in this category. EXPENDITURES Personnel Costs Fiscal Year 2026-27 - Increase of $986,296 (5.8%) Fiscal Year 2027-28 - Increase of $728,652 (4.1%) The projected increases reflect the net impact of the following:  Addition of an Environmental Coordinator in Public Works to support long-term sustainability goals and ensure compliance with local and State mandates.  Addition of a Maintenance Coordinator in Public Works to develop and implement an asset management plan and provide contractor oversight.  Addition of a Recreation Supervisor in PCS, replacing a part-time Office Assistant II, to oversee day-to-day operations of the Dublin Arts Center in advance of its opening.  Seasonal staffing costs remain flat in FY 2026-27, with a slight increase projected in FY 2027-28. 9 Page 6 of 9 Looking ahead, the 10-Year Forecast assumes 6.5 percent annual growth, based on the maximum increases outlined in the employment agreement between the City and City staff. This includes a Cost of Living Adjustment of up to 3.5 percent and merit pay of up to 3.0 percent annually. The forecast does not assume the addition of new positions. Benefits Fiscal Year 2026-27 - Increase of $647,566 (9.7%) Fiscal Year 2027-28 - Increase of $423,489 (5.8%) The projected increases in benefit costs are driven by higher CalPERS retirement contributions and health insurance premiums. The 10-Year Forecast assumes a 5.0 percent annual growth for both retirement and health care costs. Services and Supplies Fiscal Year 2026-27 - Increase of $292,554 (3.5%) Fiscal Year 2027-28 - Increase of $197,694 (2.3%) The projected increases in Services and Supplies are primarily driven by higher insurance premiums through PLAN Joint Powers Authority (PLAN JPA), the City’s insurance pool, and the addition of the City’s self-funded workers’ compensation program. Rising insurance costs have been a recurring trend statewide, and Dublin’s experience is consistent with that of other California municipalities. Liability insurance through PLAN JPA is projected to increase approximately $400,000 (15.0 percent) in FY 2026-27 and $360,000 (11.0 percent) in FY 2027-28. The FY 2026-27 rates remain preliminary but are not expected to shift significantly, while the FY 2027-28 figures are based on PLAN JPA estimates and should be considered a placeholder pending more current information. FY 2026-27 will mark the first year the new workers’ compensation program is reflected in the budget. As the program launched January 1, 2026, the FY 2026-27 budget includes only six months of excess insurance costs to align the program with the fiscal year. The full-year cost beginning in FY 2027-28 is projected at approximately $140,000 annually. Excluding insurance, Services and Supplies costs are flat in FY 2026-27, with FY 2027-28 reflecting a decrease of approximately $255,000 (3.0 percent) attributable to one-time costs associated with the opening of the Dublin Arts Center. The 10-Year Forecast assumes 2.0 percent annual growth overall, reflecting insurance premiums growing at 6.0 to 8.0 percent annually, offset by non-insurance costs remaining relatively flat. Contract Services Fiscal Year 2026-27 - Increase of $5,653,182 (7.7%) Fiscal Year 2027-28 - Increase of $2,659,199 (3.3%) Contract Services represents the City’s largest expenditure category, with projected increases of 7.7 percent ($5,653,182) in FY 2026-27 and 3.3 percent ($2,659,199) in FY 2027-28. These increases are primarily attributable to the revised maintenance agreement with MCE 10 Page 7 of 9 Corporation, as discussed below, and a projected 6.0 percent increase to both the Fire and Police service agreements; it should be noted that final proposals from either organization have not yet been received. Other contract services include Library Services, Crossing Guards, City Attorney, and Animal Services, as well as operating contracts for PCS instructors and programs, non-MCE street maintenance, and finance and administration consulting. The 10-Year Forecast assumes 6.0 percent annual growth, consistent with historical contract cost averages over the past decade. Internal Services Fund Charges Fiscal Year 2026-27 - Increase of $581,790 (9.9%) Fiscal Year 2027-28 - Increase of $646,764 (10.0%) Internal Services Fund (ISF) Charges represent costs allocated to City departments for Information Technology (IT) operations and the replacement of City facilities, vehicles, and equipment. The projected increases in both fiscal years are primarily driven by higher IT operating costs and increased contributions to the City’s replacement funds. Technology-related costs are funded through the IT ISF and allocated to departments based on service usage and equipment assignments. These costs have risen steadily over the past five years as the City continues to expand its technological capabilities. Contributions to replacement funds have similarly increased to ensure adequate resources are set aside for future capital needs as the City’s infrastructure continues to age. Looking ahead, the 10-Year Forecast assumes 10.0 percent annual growth. However, this assumption may be revisited as City staff completes a comprehensive asset inventory currently underway. Once finalized, any identified funding deficiencies may necessitate adjustments to annual ISF replacement fund contributions to ensure sufficient resources are available for future replacements. MCE CORPORATION MAINTENANCE AGREEMENT Among the expenditure categories discussed, the City’s maintenance agreement with MCE Corporation (MCE) warrants a more detailed review given its scale, complexity, and significance to the overall budget. As the City’s infrastructure continues to grow and age, the MCE agreement plays a central role in sustaining service levels and advancing the City’s long- term asset management goals. The following outlines the proposed budget for each fiscal yea r and the primary factors driving the associated costs. FY2026-27 Budget The proposed FY 2026–27 MCE maintenance services budget of $13,302,388 reflects an increase of $1,381,208 (11.59 percent) over the prior year. While notable , this increase reflects the continued growth, complexity, and aging of the City’s infrastructure, as well as established service level expectations. As infrastructure ages, maintenance needs increase in both volume and complexity, requiring more specialized and coordinated efforts. The budget also reflects the City’s shift toward a more proactive maintenance approach, emphasizing preventative maintenance and asset management to improve long-term reliability and reduce lifecycle 11 Page 8 of 9 costs. The primary factors contributing to the increase include, but are not limited to, the following:  System Expansion - New or Recently Added Parks and Facilities Approximately $295,000 is attributable to the maintenance of eight newly added, recently completed, or soon-to-open parks and facilities, including Wallis Ranch Park, Wallis Ranch Dog Park, Iron Horse Nature Park and Open Space, Forest Park, Francis Ranch North (Poppy Meadow) and South (Wild Wind) Parks, Dublin Centre Park, and the Dublin Arts Center. This amount reflects only the incremental increase in FY 2026- 27; total annual maintenance costs for these facilities are estimated to exceed $700,000. The FY 2026-27 budget reflects a phased funding approach, with costs prorated based on anticipated opening dates and full-year costs carried into FY 2027- 28.  Green Stormwater Infrastructure Maintenance Approximately $285,000 supports maintenance associated with new Municipal Regional Stormwater Permit requirements across more than 30 Green Stormwater Infrastructure (GSI) facilities, including basins and bioretention areas. Failure to meet these regulatory requirements could result in fines, enforcement actions, increased oversight, and potential loss of grant funding eligibility.  Preventative Maintenance Enhancements Approximately $285,000 is budgeted to expand preventative maintenance efforts across City facilities and infrastructure, consistent with the City's Strategic Plan emphasis on proactive asset management and long-term infrastructure reliability. This investment supports a shift away from reactive, break-fix maintenance, extending asset life, improving system performance, and reducing the frequency and cost of unexpected failures.  New Analyst Position to support Asset Management Approximately $140,000 is budgeted for a new MCE Management Analyst position to support the operational side of maintenance services, including the development and implementation of a computerized maintenance management system and a comprehensive asset management program. This dedicated position will manage contractor-specific functions including maintenance operations data, work order management, performance tracking, and field activity integration — functions that must be performed within MCE's scope of services.  Consumer Price Index Adjustment Approximately $358,000 reflects anticipated inflationary adjustments consistent with a CPI increase of up to 3.0 percent. FY2027-28 Budget The proposed FY 2027-28 budget of $13,840,364 reflects an increase of $537,976 (4.04 percent) from the prior fiscal year, primarily driven by CPI adjustments. Additionally, three 12 Page 9 of 9 parks and one GSI facility anticipated to open late in FY 2026–27 will require full-year maintenance funding in FY 2027–28, including Francis Ranch North (Poppy Meadow) and South (Wild Wind) Parks, Dublin Centre Park, and the GSI facility at the Iron Horse Trail south of Amador Valley Boulevard. ATTACHMENTS: None. 13