Hi, welcome.

This is the April 30th, 2026 special meeting of the Measure O Citizens Oversight Committee.

We're conducting this meeting meeting at City Hall in the chamber.

The meeting is being broadcast on TV, video streamed, and can be viewed later on the city's website or the city's YouTube channel.

First item, Jeff Feit, a committee member moved out of the area and so was no longer eligible and has resigned.

We will be looking for another committee member.

Will the Secretary please call the roll?

Yes, Chair Bartlett.

Here.

Vice Chair Mulligan?

Here.

Committee member Hildreth.

Here.

And committee member Smyers.

Here.

Thank you.

Have the committee members reviewed the minutes from the last special meeting?

I have.

I have.

Yes.

Would you conduct a roll call?

How about a motion to approve the minutes?

Acceptable without correction.

I'll second.

Okay, and roll call vote.

Chair Bartlett.

Approved.

Vice Chair Mulligan.

Approved.

Committee member Hildreth.

Yes.

Committee member Smyers.

Yes.

Thank you.

Under California public under California law, public comments in special meetings are limited to subjects that are on the agenda.

Therefore, public comment will take place during the committee consideration of the item.

The only item on today's agenda is to hear the Q3 report.

The Secretary would like to present the report.

Yes, thank you.

I am Karsten Lacass, Administrative Services Director, and today I'm going to walk through the fiscal year 26 third quarter budget update for Measure O.

So this afternoon I will cover our projected revenues and drivers for those expected results.

We will look at the expenditures to date and where we think we will be at year end, and the projected fund balance for fiscal year 26 and the requested action of this committee this afternoon.

So revenue and expenditure projections for the third quarter are based on actual results through March 30th of 2026, as well as anticipated changes in the economy and operations through the end of the fiscal year.

Measure O revenues and use of reserves are projected to be 23.16 million at the end of fiscal year 26, which exceeds budget by approximately 440,000.

Expenditures are projected to be under budget by approximately 80,000, and we will cover the expenditures in each budget category further into the presentation.

There is a projected contribution to fund balance at year end of approximately 2.3 million.

As you know, the transaction and use tax revenue is the primary revenue in Measure O.

For fiscal year 26, it is projected to be approximately 180,000 more than budget.

The interest earned is expected to exceed budget by about 260,000 for a total projected revenue of 13.28 million.

Beginning in fiscal year 24, the city set aside 9 million annually in a dedicated reserve for the Heather Farm Park Aquatic and Community Center project.

The reserved reached 16 million as of June 30th of 2025.

And in November of 2025, 9.88 million of that reserve was appropriated for phase two construction, leaving a reserve balance of 6.12 million.

The total revenue and use of reserves projected for fiscal year 26 is 23.16 million.

Next I will touch on the main drivers for the increases in the transaction and use tax revenues.

Sales and use taxes statewide are experiencing slower than anticipated growth over fiscal year 25 at only 1.2 percent.

Locally, Walnut Creek has been impacted by the changes in the auto and transportation category.

However, where we saw just a 0.4% growth in new motor vehicle sales, both the county and state had negative growth of 1.7 and 5.3 respectively.

Walnut Creek experienced growth of 3.5% across all categories year over year, which exceeds both the county growth of just 0.8% and the state at 1.2%.

Measure O is collected with sales tax and growth generally tracks similarly to sales tax growth with some differences within categories since it is a transaction in use tax.

When comparing quarters year over year, measure O revenue has increased by 5.5%.

The most significant increases occurred in general consumer goods, 6.2%, restaurants and hotels at 8.3%, and building and construction at 13.1%.

All categories had increases except for autos and transportation, which dropped slightly at 0.9%.

And as a reminder, the measure 0 portion of an auto sale is based on where the vehicle is registered versus where it was purchased.

So this next slide represents the percentage of the total transaction and use tax revenue received by industry category for the first two quarters of fiscal year 26, with general consumer goods being the largest percentage.

The fiscal year 26 total budgeted expenditure is 20.97 million with projected expenditures of 20.88 million, which will result in approximately 80,000 in expenditure savings.

Capital project funding is transferred from various funding sources to the capital fund.

And in the case of Measure O, 10.13 million has been transferred to the Capital Fund.

So that amount is projected to be fully spent at year end.

In December 2025, the city issued $55 million in bonds to fund the project at Heather Farm.

The bonds have a debt service of $7.53 million, which is due June 1st and will be fully spent.

So next I will discuss each of these categories in more detail, including the amounts allocated to capital as well as the debt service.

Over the last two fiscal years, City Council allocated one-time funding for Measure O to Walnut Creek Downtown for events and initiatives.

This includes $325,000 in fiscal year 25 into fiscal year 26.

These funds have supported a range of initiatives, including updated utility box artwork, multi-year holiday decoration installation and removal, enhancements to Walnut Creek on Ice, aesthetic upgrades to mini plazas, expansion of the First Wednesday program, development of the downtown vision plan, and assistance with event permit fees for Oktoberfest and Walnut Creek on Ice.

Funding allocated to homeless services supports the community development department's partnership with Contra Costa County to continue the full-time core homeless outreach team, which engages unsheltered individuals, connects them to services, and helps place them in a shelter and permanent housing through the county's coordinated entry system.

The program costs about 284,000 annually, with Measure O contributing 250,000, and the remaining balance covered by other eligible sources such as grants.

The full Measure O allocation is expected to be expended in fiscal year 26.

Funding was budgeted for marketing, advertising, and public relations costs to support expanding and tracking new audiences as part of the Leisure Center strategic plan.

Additionally, the program coordinator manages the technical requirements of artists, supports presentation series and festivals, and assists with expanded programming at the Leisure Center.

It's anticipated at fiscal year end that there will be an expenditure savings of approximately 50,000, and that's due to the timing of filling the program coordinator position, which wasn't until October of 2025 in this fiscal year.

The Contra Costa County provides 40 base hours at both the Walnut Creek and Ignacio Valley branches.

Measure O funds an additional 12 hours per week at each branch.

These extra hours add a sixth open day on Monday, as well as two additional hours on Tuesday.

The total annual cost is approximately 623,000.

This amount will be fully spent or obligated at year end.

The public safety category is cross-departmental.

It includes seven positions in the police department, all of which are filled.

Five police officers are assigned to downtown patrol, and costs are incurred in Measure O as patrol officers perform specific activities assigned to Measure O funding.

Additionally, there is one dispatch supervisor and a crime prevention specialist.

And lastly, funding has been allocated to the public works department for crossing guards at local schools, which is managed by contract.

As you may recall, we removed the vacancy factor assumption in the fiscal year 26 and 27 budget since the limited number of positions in Measure O meant that the fund is more affected when all the positions are filled.

So this change is resulting in a small amount of projected savings at year end in this category of approximately 20,000.

The sustainability analyst funded by Measure O implements recommendations from the sustainability action plan approved by City Council.

It's anticipated there will be slight savings of about 9,000 at fiscal year end, and again, that's due to the removal of the vacancy rate assumption from the budget.

As mentioned earlier, 9.88 million was allocated from reserves to capital for a portion of phase two of the Heather Farm aquatic center, aquatic and community center project, as well as 250,000 for the Clark Pool and Pool House repurposing master plan.

In December of 2025, 55 million in lease revenue bonds were issued at a favorable 2.17% yield, resulting in an annual debt service of about $7.5 million.

The lower in to then anticipated debt service results in approximately $1.5 million in savings compared to the original $9 million set aside.

The total project budget is $75.8 million.

It's funded by multiple funding sources.

The general fund facilities reserve, the measure, O Reserve, as well as the bond proceeds.

The bond proceeds expended to date are just over $2 million.

And the full amount of the bond proceeds is obligated for the costs associated with construction of the project.

This next slide shows these same expenditures by department with the capital improvement projects managed by public works and the debt service in finance.

An estimated contribution to fund balance of $2.27 million is projected at year end, primarily due to the approximate million and a half savings from the debt service.

The fiscal year 26 projected fund balance for measure O of $12.38 million includes the remaining $6.12 million balance in the reserve for the aquatic and community center project, as well as unallocated reserves from year-end balances in fiscal year 24 and fiscal year 25 of 3.99 million.

So with that, we're asking of you today is to review the revenues and expenditures and provide feedback as to whether expenditures align with the adopted legislation and spending plan, and then refer the report to City Council for acceptance.

And with that, we have staff able to respond to any questions you may have.

Thank you, Kristen.

The committee members have any comments or questions.

The wide scope of the of your presentation, I think shows the wide range of the uh benefits from Measure O, uh, which I think is what the voters were hoping for.

That's all good.

The only other thing I had was um the pool.

Yeah, I heard that they were digging a hole.

Does it can someone uh can we get updated on what the status of that construction is?

Yeah, we have a Mike Vickers here from Public Works who can help out with these questions.

Good afternoon, Mike Vickers uh Public Works uh assistant director.

What was your question specifically?

Well, I just an update on a construction status and any no surprises, hopefully.

And everything's going along as is planned.

Yeah, I mean, we we got off running really quick.

Uh trees came down, we started doing the dirt, and then we got um hit with a couple couple weeks of rain, and so we've been drying things out.

We didn't move too much dirt this week.

We'll be back into move in more dirt next week and start with the underground construction for the main drainage lines.

Um we are uh coming across a fair amount of groundwater, which was anticipated.

Um it's probably a little bit more this season than what we seen last season.

Um, but it's part of the dewatering process, so that's that's slowing things a few days, but really not having too much of an impact.

Uh great.

Sounds like it's uh going as as expected then.

On schedule, yep.

Right.

Thanks.

Yes, you're welcome.

That's all for me.

I um I had a uh comment and the question.

I I was confused when we got the original report.

Uh by first of all, congratulations on the bond sale, super low rate.

That's really good.

Saves the city a lot of money.

Um but I was confused by the debt repayment schedule.

Um if it's two percent on fifty-five million dollars, it seems like that should be about a million two per year.

I did look into it a little bit, and this is just for education of the fellow uh commission members, but but it's it's not a traditional bond where it pays off 55 million at the end.

It's it's one where it amortizes through the life of the bond, so you're actually paying back some every year.

So that that was confusing the I expected to see a two million dollar number, not a seven and a half million dollar number.

So I just wanted to share that in case that was uh confusing to you all.

Well, one of the other uh the other question I had for you is um the chair and I attended uh a mayor's meeting um last week where uh there was discussion about the fact that there might be a reallocation of some of you you mentioned in your comments about the fact that the auto sales tax revenues come to where the car is registered.

Well one of the other uh the other question I had for you is um the chair and I attended uh a mayor's meeting um last week where uh there was discussion about the fact that there might be a reallocation of some of you you mentioned in your comments about the fact that the auto sales tax revenues come to where the car is registered, and um he said there might be a change in some of that for those who buy their cars online that perhaps some of that would go to wherever the distribution center is versus where the car just I just wondered if you have any thoughts about will that change and it maybe it doesn't move the meeting needle, I don't I don't know, but do you think that'll change the um the financial implications of measure O receipts?

It actually won't change measure O because it's the auto piece of the sale really is related to where it's registered.

So we it will impact our regular Bradley Burns sales tax, but Measure O will be relatively unaffected by it.

Any changes to Measure O are generally more influenced by more online sales versus in-store sales.

So um if things are shipped to Walnut Creek, that works in our benefit, but the the changes to the autos will not impact us on the Measure O side.

Okay.

Uh just a follow-up to that.

I yeah, I read somewhere it was a couple months ago where there was a little bit of a surprise and how the revenues were shared.

Is that what this is about?

That's correct.

There was a change from the California Department of Tax and Fee Administration on how some auto sales are reported.

And so because of that, the city has been impacted negatively for by about $2 million in this current fiscal year because of the reallocation of where those sales tax dollars go.

And so that was actually something that we did not have any control over.

It was a change made at that level.

Thank you.

So following on that, uh I remember the the city impact figure of two million, and uh I've I've enjoyed watching the uh the appointment of of new police officers, safety officers, crossing guards, all of that.

And I usually ask uh, are those positions secure?

And now that they're in place, are they going to remain?

And the answer so far for two years has been yes, yes, always.

So uh when the city is now gonna wrestle with a uh two million dollars less, how might that affect some of the the positions that we've managed to fill in these other areas like uh like the police department?

So that would not impact the positions that are funded by measure okay so that really is uh an issue specific to the general fund.

And so the general fund is where we would we would need to do any balancing based on the any revenue losses.

Okay, thank you.

Just a quick uh comment here.

Um I'd like to say I think it's wonderful that we're using the Measure O funds for 12 extra open library hours per week at each of the branches.

But putting on my Contracasta County Library Commissioner hat, I just wanted to make every everyone aware that the county library is willing to uh support up to 16 our extra hours in each branch.

So we could go a little more, but not with that two million dollar news.

But I think it's great we're doing what we're doing with the 12 extra hours.

So I've been privileged to watch Measure O engender happiness in the community, really.

Uh uh the the things that it's been able to fund uh and accomplish have really been just a joy to watch.

And being in the position that we all here are, we see more of that in detail than than the community does.

So uh I wanted to to start inviting some of the recipients of our funding uh up to the dais to explain or to share really how their mission has been impacted by measure o.

Uh so I had a discussion uh with Kathy Hemingway, who's here with us today from the Walnut Creek downtown.

Uh and and those things that that uh the Walnut Creek downtown does are all around you when you walk around.

Uh so I'm gonna let Kathy please come on up uh and uh tell us how the the funding has affected your mission good afternoon, Kathy Hemingway, executive director with Walnut Creek Downtown Association.

And uh I wanted to share um the Walnut Creek Downtown Association mission statement um in advance of sharing the positive impact that the Measure O funding has um how it has impacted our organization and its mission.

And the statement reads the uh leave and collaborate with our members, partners, and community to promote and enhance downtown Walnut Creek.

So the Measure O funding has been essential in advancing our uh missions and to promote uh which is to promote and enhance the downtown Walnut Creek while directly supporting its for 650 local businesses.

Uh funding um events and waiving the fees for Walnut Creek on Ice and Oktoberfests reduce costs and drive customer traffic to downtown businesses.

Um our events generally begin with a zero budget, um, so the waiving of our park fees uh or your part the city's park fees um directly impacts our programming.

Um expansion of the programs like First Wednesday, which is now um evolved into the locust street festival, um, increased um consistent economic activity to the downtown.

Each event um last year brought three to four thousand people to the downtown on a Wednesday evening.

Um more programming equals more foot traffic and longer visits.

Last year's um August Locust Street event saw an average of two uh two-hour um visit time with direct traffic going into local businesses before and after each of the events.

The placemaking and beautification with enhancements to the mini plaza public art and holiday decor, um they improve the downtown experience as you um probably well know, offering a variety in activations and encourage um again that repeat visit.

The holiday decor that we've um installed over the last um two, three years helped Walnut Creek come to life, um, especially after the pandemic when neighboring cities were um spending time and money on lights and banners and improvements, and so as a regional destination um and shopping um shopping and dining destinations, it was very important to um have Walnut Creek um celebrate and shine bright uh for our businesses, the visitors and residents.

Uh our big belly wraps um have engaged artists and art lovers to enjoy unique applications on over 30 pairs of trash units throughout the downtown, adding color and curiosity as they as um visitors walk through the downtown and the collaboration that was able to um really um strengthen the partnership between Walnut Creek downtown, the city, our businesses, our board, our community um was developed through our vision plan um effort, and that year and a half effort, though a little longer than we wanted, um, has really produced um a strong plan for the next five years.

Um so that through that outreach, um, the association has developed a path um centered on creating a downtown that continues to be vibrant, walkable and active every day, all day throughout the year.

So that vision will reflect both the downtown's current strengths and the clear direction expressed by the community through that effort.

So measure O funding delivers visible uh improvements, increased activity and direct economic benefit to Walnut Creek down to Walnut Creek's downtown and business community, and we thank you for your continued support and enhancing the uniqueness and the vitality of downtown Walnut Creek, which WCD is proud to champion.

Thank you very much, Kathy.

Uh in case any of you have noticed you've been maybe at Starbucks or over uh by Macy's uh and you've heard some live piano music, maybe extraordinary, maybe uh you know, a child performance, uh, those pianos are there because of Walnut Creek downtown.

That's their painted piano program, and they do this every year.

You can donate an old piano and it'll end up in its final years, entertaining all of us and and bringing you know access to anybody who happens to be downtown, so inclined to make some music.

So thanks again for that, Kathy.

It's time now for a public comment.

Yes?

I'm sorry, I just had one more question.

I was I was thinking back to the uh the issue of the bond of and this is a math question, more of a longer term thing.

So uh I think Measure O has a tenure life.

I think I recollect that.

And we've been reserving roughly nine million dollars a year.

So nine times ten is ninety.

And we the city just sold a bond for 55, so that's 145.

The swim center is gonna cost half of that.

Do you do you anticipate that once we get farther down the road on the swim center that the nine million dollars a year will not go towards the swim center?

I mean, how to how do the how do we reconcile that math if we're sitting here seven years from now?

I well, I just want to clarify that the nine million was set aside initially before we issued the bonds, but now that nine million, seven and a half of it will go toward the bond payment.

So we won't be accumulating that that level of resources, and then what happens with the additional measure O money that's accumulating that would come back to council for consideration on how they want to look at that holistically in order to allocate those monies.

And then what happens with the additional measure o money that's accumulating that would come back to council for consideration on how they want to look at that holistically in order to allocate those monies.

But ultimately, the when the bonds will expire at the same timing as the measure, and by then we'll be fully paid off.

But the only additional measure of funding will be essentially what accumulates this million and a half annually, and then any additional underspending we do on the budget.

So how much that will be it won't be as um quite as much as the kind of doubling what the cost of the project is.

Okay, yeah.

I I I understand and I appreciate it.

And as you described it, um the city is spending the money on the items that uh measure O voters approved.

So um just wanted to know about the back end of it.

So thank you.

Okay, thank you, Mr.

Chairman.

There are any additional comments from the committee.

All right, so we can move on now to the public comment portion of the meeting.

Uh if you'd like to comment, please take a walk up here, fill out a card, uh, hand it to the secretary, and you'll have two minutes to speak.

All right.

So this concludes the public comment period.

Are there any additional questions or comments from the committee?

No.

So our ask was to uh approve the report for submission to city council for approval.

Can I get a motion?

I'll move that the committee refer the fiscal year 26 third quarter measure or budget update report to the city council for acceptance.

I'll second that.

Okay.

Yes.

Um Chair Bartlett.

Yes.

Vice Chair Mulligan?

Yes.

Committee member Hildreth?

Yes.

And committee member Smyers.

Yes.

Motion passes unanimously.

Thank you.

Are there any additional comments or questions or anything you'd like to say?

Our next meeting will be in early December, and we'll be discussing the year end, the how the how we completed fiscal year 26 as well as the audit.

If there is no further business, I will adjourn the meeting.

Thank you.

Meeting adjourned.