>> JIM SHANNON YOU ON THE LINE

IF I COULD BUY JUST TO TWO MINUTES >> WE DO HAVE A QUORUM I’VE BEEN CHECKING OFF PEOPLE AS THEY COME IN >> PERFECT THANK YOU >> HEY JIM ARE YOU FEELING COMFORTABLE TO GET STARTED? >> I THINK SO I’M JUST MANAGING ALL MY SCREENS WITH THE PRESENTATIONS >> WE ARE ALL BECOMING ZOOM EXPERTS >> WE ARE TRYING TO >> I’VE GOT TO MAKE SURE MY BOSS IS ONLINE HERE >> THERE ARE SOME HE FACES HERE >> Mayor Liccardo: ALL RIGHT WELCOME EVERYBODY. WE WILL BEGIN OUR ABBREVIATED BUDGET SESSIONS FOR THE UPCOMING FISCAL YEAR 20/21. I WANT TO THANKEVERYONE IN THE BUDGET OFFICE FOR THEIR INCREDIBLY HARD WORK . JIM SHANNON AND THE ENTIRE TEAM. WE KNOW THEY

HAVEN’T BEEN SLEEPING FOR DAYS LIVING THE LIFE OF ROCK STARS WITHOUT THE DEFAME THE BOOZE AND ALL THE MONEY THAT COMES WITH IT. THEY ARE JUST DOING INCREDIBLY HARD WORK. WE APPRECIATE ALL THEIR HARD WORK AND SLEEP IS NICE. I REALLY WANT TO THANK EVERYONE IN THE CITY ORGANIZATION RIGHT NOW THESE HAVE BEEN REALLY TOUGH TIMES WE KNOW. AND THESE ARE TIMES WHEN IN EVERY DEPARTMENT I THINK ARE VERY DIFFICULT DECISIONS ARE BEING MADE. UP AND DOWN THE ORGANIZATION. AND THE PAIN IS BEING FELT THROUGHOUT. I DON’T PARTICULARLY THAN THOSE MEMBERS OF OUR TEAM THAT ARE REQUIRED TO BE BUMPED OR MOVED TO DIFFERENT POSITIONS BECAUSE OF DIFFERENT CUTS THAT HAVE BEEN MADE. WE KNOW THAT IS VERY CHALLENGING. WE KNOW OBVIOUSLY THE IMPACT CAN ALL BE FELT BY OUR RESIDENTS. I’D WANT TO THANK EVERYBODY FOR THEIR HARD WORK AND TRYING TO MAKE THIS WORK AT A VERY CHALLENGING TIME. A MOMENT FOR OUR COMMUNITY AND FOR CITY ORGANIZATION. I REALLY THANK DAVE SYKES FOR HIS PROACTIVE EFFORTS. TO REACH OUT TO THE WORKFORCE THROUGH SEVERAL MEETINGS NOW THAT HAVE ENGAGED WHILE MORE THAN I THINK 1,200 OF OUR EMPLOYEES THROUGH THOSE TOWN HALLS. I THINK THAT IS CRITICALLY IMPORTANT. WE NEED TO KEEP COMMUNICATING AND OVER COMMUNICATING BECAUSE THESE ARE HARD DECISIONS AND EVERYBODY NEEDS TO UNDERSTAND WHAT’S AT STAKE AND BE A PART OF THE DECISION. THANK YOU ALL FOR YOUR HARD WORK. DAVE YOU WANT TO TAKE IT AWAY? >> YES THANK YOU MAYOR. I APPRECIATE THAT. WE’RE GONNA PUT THEPOWERPOINT UP JIM ? >> David Sykes: YES WE CAN. I CERTAINLY APPRECIATE THIS OPPORTUNITY. A LOT OF WORK HAS GONE INTO GETTING US HERE. IF YOU CAN GO TO THE NEXT SLIDE JIM . I THINK IT IS IMPORTANT IN SOME WAYS TO ACKNOWLEDGE SOME OF THE OBVIOUS HERE. AND WHAT WE HAVE HAD TO WORK THROUGH TO GET TO THIS POINT CERTAINLY THIS SUDDENLY AND SEVERE REVENUE SHORTFALL THAT WE’VE HAD TO ADDRESS IS REALLY WHAT HAS BEEN THE PRIMARY CHALLENGE ALL WHILE WE CONTINUE TO STOP OPERATING IN EMERGENCY MODE. WITH ALL OF OUR OPERATIONS. SO WHAT YOU HAVE IN FRONT OF YOU IS REALLY A SIGNIFICANTLY MODIFIED BUDGET DOCUMENT. AND CERTAINLY WE ARE ALL FEELING THE COMPRESSED PROCESS AND REALLY JUST-IN-TIME RELEASES OF INFORMATION THAT TYPICALLY WOULD NOT BE ACCEPTABLE BUT AT THIS POINT ARE THE ONLY WAY WE CAN DO IT PREPARATION OF THE BUDGET IS HERE THIS YEAR WAS BASICALLY STARTING FROM SCRATCH. WHEN THE KOVIC PRIVATES CRISIS BEGAN. AND SO WHAT YOU HAVE IS A TRIMMED DOWN VERSION OF THE BUDGET. WE ARE ALSO NOT ABLE TO FOLLOW ALLOF THE DIRECTION THE COUNCIL HAS GIVEN US WHICH IN NORMAL TIMES WOULD BE SACRILEGIOUS TO BE HONEST. BUT WE’VE HAD TO MAKE ADJUSTMENTS AND ACCOMMODATE AN FACTOR IN WHAT WE CAN. AND SO I CERTAINLY WANT TO ACKNOWLEDGE THE COMPRESSED TIMEFRAME AND THE JUST-IN-TIME RELEASES ARE GREAT CHALLENGES FOR EVERYONE AND CERTAINLY WITH REGARD TO THE COLLABORATION PROCESS NEXT SLIDE JIM. SO WHAT YOU HAVE BEFORE YOU IS A BALANCED BUDGET . IT’S WHAT YOU SEE ON THE SCREEN ARE REALLY THE FACTORS THAT DROVE OUR DECISION-MAKING FIRST OF ALL WE ARE LOOKING AT THIS AS A BEGINNING OF A RECESSION. AND A LONG RECOVERY. SO WHAT YOU HAVE IN THE BUDGET IS OUR ATTEMPT TO ADDRESS ONGOING REDUCTIONS THAT WE ANTICIPATE SO ABOUT 70 PERCENT OF THE REDUCTIONS ARE ONGOING AND 30 PERCENT TAKE ADVANTAGE OF ONE-TIME MONIES. WE THOUGHT THAT WAS A RESPONSIBLE APPROACH GIVEN THAT WE DON’T SEE THE ECONOMY REBOUNDING QUICKLY AND WENEED TO BE ABLE TO ADDRESS THESE THINGS FOR THE LONG HAUL. SECONDLY , ALWAYS FRONT AND MINE ARE UNDERSTANDING AND ON TRYING TO MINIMIZE IMPACTS TO THE COMMUNITY. IN RECOGNIZING HOW THOSE IMPACTS CAN BE DISPROPORTIONATE. WE’VE DONE EVERYTHING WE CAN TO REDUCE IMPACTS . WHAT HAS JUST BEEN RELEASED THIS MORNING JUST-IN-TIME ARETHE EQUITY REVIEW . WE PERFORMED THE

EQUITY REVIEW IN TWO STEPS THE FIRST STEP WAS TO PUT REDUCTION PROPOSALS INTO CATEGORIES. AND THEN WE DID A SPRINT SCREEN OF THE IMPACTFUL REDUCTIONS. SO CERTAINLY NOT WAVERING ON OUR COMMITMENT. TO DO THE REVIEW. BUT CERTAINLY COMPLETELY CHALLENGED BY THE CIRCUMSTANCES THAT WE FIND OURSELVES IN. SO WHAT WE HAVE RELEASED TODAY IS NOT A LIPSERVICE REVIEW. IT’S A MEANINGFUL REVIEW. OF THE IMPACTFUL REDUCTIONS IN EDGE WANT TO THANK THE MEMBERS OF THE GEAR TEAM THAT HELPED DO THAT REVIEW AND CAME THROUGH FOR US. I ALSO WANT TO ACKNOWLEDGE THE FACT THAT WE ARE AN ORGANIZATION POWERED BY PEOPLE. MINIMIZING LAYOFFS IS NOT JUST A STRATEGY TO PROTECT OUR OWN INSTANT STRATEGY RECOGNIZING THAT WITHOUT OUR PEOPLE WE CAN PERFORM SERVICES WE WEREN’T ABLE TO TAKE ADVANTAGE OF THE LARGE NUMBER OFVACANCIES THAT WE HAVE. IN THE ORGANIZATION . THE BUDGET DOES INCLUDE ELIMINATION OF HUNDRED AND THREE POSITIONS THIS WILL TRANSLATE TO REDUCE CAPACITY REDUCE PROGRAMMING AND REDUCE SERVICES AND WE WILL BE GOING THROUGH THOSE ITEMS IN DETAIL AS WE TALKED THROUGH THE BUDGET HERE. BECAUSE OF THE LARGE NUMBER OF VACANCIES WE ARE ABLE TO ACCOMPLISH A LOT OF THIS WITHOUT LAYOFFS EVEN THOUGH THERE WILL BE PEOPLE MOVING FROM ONE POSITION TO ANOTHER AND BUMPING AS I SAID I THINK IT IS IMPORTANT TO NOTE THOUGH THAT THERE ARE IMPACTS TO PEOPLE. AND SO OUTSIDE OF THE BUDGET BECAUSE OF THE WAY WE DO THINGS IN TERMS OF LIMITING POSITIONS AND OVER STRENGTH POSITIONS AND ONE-TIME FUNDING. THERE ARE 59 LIMIT DATE AND OVER STRENGTH POSITIONS THAT WILL BE ENDING AS WE END THE FISCAL YEAR HERE 32 OF THOSE STAFF MEMBERS DO NOT HAVE RIGHTS TO OTHER POSITIONS. THOSE STAFF MEMBERS WILL FIND THEMSELVES WITHOUT A JOB ON JUNE 30. JUST WANT TO MAKE SURE WE ALL UNDERSTAND THERE ARE IMPACTS THE PEOPLE HERE AND THEY ARE REAL CERTAINLY JUST ACKNOWLEDGING THE UNCERTAINTY AS WE MOVE FORWARD IN RECOGNIZING THAT THERE STILL A LOT TO CHANGE ALONG THE WAY AND WE NEED TO BE READY TO REACT TO THAT. AND DO EVERYTHING ALONG THE WAY TO PRESERVE OUR CORE SERVICES NEXT SLIDE JIM. SO AS I SAID YOU HAVE BEFORE YOU A BALANCED BUDGET. MAKE NO DOUBT THERE ARE IMPACTS AND REDUCED CAPACITY IN THE BUDGET. WE HAVE PUT FORWARD A CONTINGENCY PLAN THAT IS NOT SEEKING APPROVAL AT THIS TIME BUT CERTAINLY IT’S A PLAN THAT WE WANTED TO BE ABLE TO PUT FORWARD FOR EVERYONE TO BE ABLE TO UNDERSTAND POTENTIAL IMPACT SHOULD REVENUECONDITIONS WORSEN SO WE WOULD BRING THAT BACK IN THE FALL. BUT WANTED TO BE REALLY TRANSPARENT ABOUT WHAT THOSE TYPE OF IMPACTS WOULD LOOK LIKE. ULTIMATELY WOULD BE THE DECISION OF THE MAYOR AND THE COUNCIL. UNEMPLOYMENT ENGAGEMENT WE HAVE DONE OUR BEST TO INVOLVE OUR WORKFORCE ABOUT THE PROCESS. THIS IS NOT A CHECK THE BOX THING FOR ME I THINK IT’S CRITICAL THAT WE BE ABLE TO SHARE INFORMATION WITH OUR FOR WORKFORCE AND MOR IMPORTANTLY BE ABLE TO LISTEN TO OUR WORKFORCE . UNDERSTAND THEIR CONCERN AND GET THEIR INPUT. AS THE MANGER MAYOR MENTIONED WE HAD A SERIES OF TOWNHALL MEETINGS . THE DEPARTMENTS DID A LOT OF THEIR OWN MEETINGS AS WELL. TO MAKE SURE THEY CAN GET MORE SPECIFIC WITH OUR STAFF. AND CERTAINLY WE HAD A ROBUST RESPONSE TO THE EMPLOYEE SUGGESTION PROGRAM AND I THINK IMPORTANT TO NOTE WITH COVID THERE IS STILL A LOT OF UNCERTAINTY AS WE MOVE FORWARD WE ARE STILL MANAGING THROUGH OPERATIONALLY AND THOSE CHANGES WILL CONTINUE AS WE REOPEN STILL WORKING THROUGH HOW WE CAN USE FEDERAL FUNDING. STILL HOPEFUL THAT FUTURE FIGHT FEDERAL FUNDING WILL ALLOW REIMBURSEMENT OF LOST REVENUE MANY WORKING VERY HARD IN THAT AREA. I WILL JUST AND ONBY THANKING THE MAYOR AND THE COUNCIL IN THE COMMUNITY FOR YOUR SUPPORT AND PATIENCE AND UNDERSTANDING AS WE GO THROUGH THIS PROCESS . AND REALLY A SPECIAL TENT THANKS TO JIM AND BONNIE AND CLAUDIA AND SELENA IN THE ENTIRE BUDGET OFFICE I

KNOW YOU ALL TAKE TREMENDOUS PRIDE IN YOUR WORK. WE AS A CITY HAVE A LONGHISTORY OF PRODUCING QUALITY AWARD-WINNIN BUDGETS . BUT I KNOW YOU ARE ALL SUPER TIRED . AND I JUST WANT YOU TO FEEL GOOD ABOUT WHAT YOU’VE BEEN ABLE TO ACCOMPLISH AN EXTREMELY CHALLENGING CONDITIONS. I’M VERY PROUD OF YOU ALL. NOW I’M GOING TO TURN IT OVER TO JIM AND HE’S GOING TO START GETTING INTO SOME MORE DETAIL. > THANK YOU DAVE I APPRECIATE THAT. JIM SHANNON CITY’S BUDGET DIRECTOR. GOING TO STEP THROUGH USE SOME FEW HIGH-LEVEL THINGS. AND WE ARE GOING TO SWAP IT OVER TO ECONOMIC DEVELOPMENT TO GIVE A LITTLE BIT MORE ECONOMIC PERSPECTIVE AND THEN WE WILL GO BACK TO ME TO TALK THROUGH SOME OF THE ACTIONS IN THE BUDGET ITSELF NORMALLY WHEN WE COME TO THE PROPOSED BUDGET PROCESS WE’RE THE FORECAST THAT’S OUT THERE AND THE REVENUE ASSUMPTIONS ARE DISCUSSED PRETTY IN DEPTH IN THE FORECAST AND WE MOVE ON PROPOSING HOW TO RESOLVE THAT DEFICIT OR IN THE VERY RARE EXCEPTION HOW TO SPEND THE EXTRA LITTLE SURPLUS. JUST A REMINDER FROM WHAT WE’VE BEEN WHEN WE PUT OUT THIS FORECAST IN FEBRUARY WE HAD A TINY SURPLUS OF 500,000 WHICH AT THE TIMEREPUBLISHING THE RECEIVING THINGS CHANGE . THE MAYOR’S MESSAGE RELEASE SAYS IT’S OBVIOUS THE CHANGE AND WE NEED TO PREPARE ACCORDINGLY. THEN WE ABSOLUTELY PIVOTED. IN THE LAST SIX WEEKS I THINK WE AS AN ORGANIZATION HAVE RESOLVED SHORTFALLS OF 45 MILLION AND 72 MILLION. INCREDIBLE AMOUNT OF WORK TO PIVOT IN A SHORT AMOUNT OF TIME. SO I WANTED TO SHARE THIS SLIDE HERE. BECAUSE WE DID THIS WORK IN 1,922 RESOLVE THE SHORTFALL. IN 2,021 THE WORK WE ARE DOING TODAY WE HAVE STILL PROBABLY A LONGER ROAD AHEAD OF US BECAUSE WE KNOW WE’RE PROBABLY IN AN ONGOING SITUATION. BACK IN FEBRUARY WE ARE GOING TO PROJECT DEFICITS EVEN WITH DECENT CONDITIONS WE DIDHAVE A RECESSION SCENARIO AS AN OPTION . JUST FIRST ALL CONSIDER WHAT WOULD HAPPEN OF RECESSION CAME. THAT IS WHAT WAS SHOWN IN THE RED CIRCLE AREA BELOW. BUT WHAT’S HAPPENED IS THAT RECESSION DIDN’T JUST COME IN 2021 IT’S COME NOW. AND IT’S MUCH DEEPER THAN WHAT WAS SHOWN HERE. I KNOW WE HAVE A PRETTY TOUGH ROAD AHEAD OF US AND WANT TO SET THE CONTEXT. AND HERE IS WHAT WE’VE BEEN THROUGH SINCE THE END OF THE.com OR SINCE THE.com CRASH. WE’VE HAD TO SOLVE OVER $700 MILLION OF SHORTFALLS. WE FINALLY GOT OUT OF THE WORST OF IT IN THE 12 YEARS EVEN IN 1213 THROUGH 1920 WE WOULD JUST PUMPING ALONG AND STRUCTURALLYBALANCED. NOT MUCH UP OR DOWN . AND THAT SECOND TO LAST COLUMN OR SAYS 2120 THOSE ARE THE ADOPTED PROPOSED BUDGET SHORTFALLS THAT WE SAW OF COURSE THERE’S A BIG NEGATIVE FOR 2020. 45 MILLION THAT WE HAD TO CLOSE. THIS IS MAYBE THE BEGINNING OF SOME PRETTY TOUGH TIMES ARE LIKELY THEBEGINNING OF SOME PRETTY TOUGH TIMES. RIGHT NOW WE ARE IN A REVENUE SHORTFALL . WE HAVEN’T HIT YET THE PLUS SIDE OF IT WHICH WILL BE COMING NEXT YEAR WHEN WE ARE GOING TO HAVE TO LOOK AT ALL RETIREMENT CONTRIBUTIONS. THIS IS AN EXAMPLE OF WHAT WE ARE LOOKING AT HERE FOR GENERAL FUND REVENUE LOSS WHEN YOU JUST COMPARE YOUR EXCLUDING A REVENUE CAPTURE AND COMPARING WHAT WE ARE SEEING IN THIS RECESSION WHAT WE’VE SEEN IN PAST RECESSIONS. AND FOR THE COVID WE ARE CALLING IT IT’S A GENERAL FUND SHORTFALL FROM THE DECREASE FROM 1819 OF ACTUALS OVER NINE PERCENT. WHICH IS SIGNIFICANT A HIRED THAN WHAT WAS IN THE GREAT THIS DEPRESSION WHICH WAS A NAFF AND THE.com BUST WHICH WAS THREE THIS IS A PRETTY SIGNIFICANT REVENUE LOSS WE HAVE TO DEAL WITH. WE ARE TRYING OUR BEST TO FIGURE OUT WHAT THE ESTIMATE IS AN AGENCIES ALL ACROSS THE COUNTRY ARE TRYING TO FIGURE THAT OUT TOO. WE ARE GOING TO LEARN MORE AS MORE DATA COMES IN. BUT THIS IS WHERE WE ARE AT FOR NOW. WE PREPARED FOR IT TO BE CONTINUOUS. THESE ARE THE SUMMARIZE CATEGORIES OF WHAT IS CHANGED. THE BIGGEST DRIVER HERE IS SALES TAX. AND CHRIS BERT IS GOING TO TALK ABOUT SALES TAX AND COUPLE OF OTHER BROADER ECONOMIC FACTORS IN A MOMENT. I 20 LITTLE SNAPSHOT HERE SO THE REVENUE SHORTFALL THAT WE ARE LOOKING AT COMPARED TO WHAT WE ORIGINALLY FORECASTED WITH $78.6 MILLION. WE HAD A LITTLE

BIT OF OTHER SAVINGS WHICH MADE OUR OVERALL DEFICIT BEYOND THAT $72 MILLION NUMBER. BUT THIS IS THE DIFFERENT COMPONENTS HERE. THE BIGGEST DRIVER IN SALES TAX AND WHAT MAKES IT SO TRICKY IS ONE WE DON’T REALLY KNOW WHAT WE DON’T GET OUR INFORMATION UNTIL TWO MONTHS AFTER THE LAST QUARTER ENDS SO APRIL MAY AND JUNE WE ARE KNOCKING TO KNOW THAT UNTIL THE END OF AUGUST. WE ARE TRYING TO FIGURE OUT HOW SALES TAX IS PERFORMING WHEN WE ARE IN RECESSIONARY CONSENT CONDITIONS AND WE ARE GOING TO BE SOCIALLY DISTANCE. AS WE TRY TO PUT THESE REVENUE ESTIMATES TOGETHER LOOKING CATEGORY BY CATEGORY READ WE HAVE GENERAL RETAIL WE GET TRANSPORTATION WE HAVE BUSINESS-TO-BUSINESS. YET FOOD PRODUCTS WE HAVE INSTRUCTION INTERNET SALES THE GOOD THING ABOUT SAN JOSE’S WE ARE PRETTY DIVERSE THOUGHT THEIR DIVERSIFIED DRUG MISTREATMENT OF THE CELTICS BUT AT LEAST WE ARE PRETTY BALANCED. SO FIGURING OUT WHAT THE IMPACTS ARE IN EACH OF THOSE CATEGORIES SHOULD BE MORE OF A CHILD CHALLENGING. BUT THE ASSUMPTIONS ARE THAT WE HAVE PRETTY SIGNIFICANT IMPACTED COMPARISONS IN THOSE DIFFERENT SALES TAX CATEGORIES THROUGH THE FIRST SIX MONTHS FOR SURE. SO STARTING TO GET A LITTLE BIT CLOSER TO NORMAL BUT NEVER GET BACK TO NORMAL THROUGHOUT THE FISCAL YEAR BUT IT’S REALLY THE FIRST SIX MONTHS WHICH IS GOING TO BE THE TELL TALE ABOUT HOW MUCH REVENUE IS GOING TO COME IN HOW MUCH ACTIVITY IS GOING TO BE IMPACTED BY SOCIAL DISTANCING IN THE LOWER ECONOMIC CONDITIONS. BUSINESS TAXES ALSO PREDICTED TO COME LOWER. POCKET PROPERTY TAX BY LARGE EC OF $5.8 MILLION SHORTFALL LOWERING THEIR COMPARED TO THE PREVIOUS ESTIMATE. BUT WHAT WE HAVE IS MOST OF THE PROPERTY TO SECURE PROPERTY TAX ROLL IS BASED ON THE CALENDAR YEAR 2019. SO THAT FLOWS. AND SO MOST OF WHAT WE ARE GOING TO RECEIVE IN 2021 IS GOING TO BE BASED ON THE 2019 CALENDAR YEAR. WHAT IS A LITTLE BIT OF AN OUTLIER ARE THOSE UNSECURE PROPERTY TAXES. THAT’S COME DOWN A LITTLE BIT AS WELL AS WHAT WE HAVE FOR OUR EDUCATION REVENUE IDENTIFY CAJUN FUND WHICH IS PRETTY HARD FOR US TO ESTIMATE BECAUSE WE DON’T REALLY GET ANY DATA FOR THAT. SO WE’VE TAKEN US DOWN PRETTY SIGNIFICANTLY WE WILL ALREADY HAD A PRETTY PESSIMISTIC VERSION FORGETTING 23 MILLION THIS YEAR WE ALREADY BROUGHT THAT DOWN BY ABOUT 11 AND HALF-MILLION SON AND A LITTLE BIT MORE. PRETTY PESSIMISTIC THERE. BUT THE IMPACT OF PROPERTY TAX IS GOING TO BE SLIGHT THIS YEAR PUT MORE SIGNIFICANT IN 21/22. WHICH IS ANOTHER REASON WE KNOW THIS IS AN ONGOING ISSUE. PROPERTY TAXES ON CAPITAL LATER. CO2 T TAX. THIS IS A VERY SIGNIFICANT HIT HERE. DOES THAT PROTECT PROJECTION OF 30 PERCENT BELOW 2018/19 ACTUALS WE DON’T HAVE CONVENTIONS GOING ON WE ARE LIMITED IN OUR COMMUNITY EVENTS BUSINESS INVESTMENTS HOTEL IS DOWN ASSUMING SOME PRETTY LOW OCCUPANCY LEVELS FOR THE FIRST SIX MONTHS OF THE YEAR WITH A LITTLE BIT MORE RETURN TO NORMAL BUT OF COURSE NEVER GETTING BACK TO NORMAL OTHER WE JUST WANTED TO SHOW THIS YEAR TO IDENTIFY SOME OF THE MAIN DRIVERS THAT ARE MOVING OUR REVENUE DOWN. LOOKING AT SALES TAX A LITTLE BIT MORE SPECIFICALLY FOR THE GENERAL SALES TAX. WE LIKE TO LOOK AT THIS ONE BECAUSE THIS IS THE ONE PERCENT THAT WE GET OF THE STATE SALES TAX AMOUNT. IF THE ONE PERCENT GOES TO CITIES AND WE LIKE TO USE THIS BECAUSE THIS IS HOW WE COMPARE TO OTHE CITIES AND DOESN’T HAVE ANY OF THE NOISE IN IT BUT HAS A LIMITED AMOUNT OF NOISE. SO IT’S KIND OF A NICE . YOU CAN SEE WHAT WE ARE LOOKING AT HERE FOR HOW SALES TAX HAS PERFORMED. AND WHEN YOU LOOK AT THE 2021 ESTIMATE FOR OUR SALES TAX VERSE THAT 18/19 ACTUALS. IT’S ABOUT A 19 PERCENT DROP. FROM WHERE WE HAD BEEN. SO PRETTY SIGNIFICANT AMOUNTS THERE IT IS IN LINE WITH WE ARE LITTLE BIT MORE PESSIMISTIC BUT WE ARE IN LINE WITH OTHER JURISDICTIONS THAT ARE OUT THERE. THE STATE WHEN I DUG INTO THE STATE OF CALIFORNIA IS PROJECTING. THEY ARE PROJECTING A 20 SEVEN PERCENT DECREASE IN SALES TAX AND THEIR PREVIOUS ASSESSMENTS FOR 2021. WHEN I WENT IN KIND COMPARED WHAT THEY ARE ESTIMATING FOR 2021 AND VERSUS WHAT THEY HAD FOR 18/19 THERE AT A 20 PERCENT REDUCTION. SO PRETTY CLOSE TO ALIGN WITH THE STATUS FOR NOW. BUT THIS INFORMATION IS CHANGING RAPIDLY. SO WE ARE GOING TO GIVE AN EYE ON IT AS THINGS PROCEED. I THINK NOW WHAT I’M GOING TO DO IS I’M GOING TO SWITCH OVER HERE TO HAVE ECONOMIC DEVELOPMENT GIVE US A LITTLE BIT MORE IN DEPTH ON THE ECONOMY. SO PLEASE BEAR WITH

ME AS I CHANGE UP. AND I’M GOING TO TOSS THIS OVER TO KIM WALLACE. IF I SWITCH MY DISPLAY SETTINGS. AND IF I CAN HAVE KIM WALSH CHIMING >> THANK YOU JOE I’M KIM WALSH STEPHANIE’S DEPUTY CITY MANAGER AND ECONOMIC STEP. TO GIVE OFF YOUR DISCUSSION OF THE PROPOSED BUDGET OVER THE NEXT TWO DAYS JIM ASKED US TO PROVIDE SOME CONTACTS AND SOME INSIGHT INTO THE CURRENT ECONOMIC SITUATION WE THINK IT’S REALLY IMPORTANT TO THINK TOGETHER ABOUT WHAT THE ECONOMIC SITUATION WHICH IS LARGELY OUT OF OUR CONTROL MEANS FOR THE CITY’S ABILITY T PROVIDE SERVICES TO MEET THE NEEDS OF OUR RESIDENTS . NOT JUST THIS YEAR AND OVER THE NEXT SEVERAL YEARS. AND OF COURSE THIS IS REALLY CHALLENGING BECAUSE THE CURRENT SITUATION IS REALLY THE VERY DEFINITION OF UNCHARTED TERRITORY. THERE IS CLEARLY A VERY HIGH DEGREE OF UNCERTAINTY ON ALL FRONTS. AND THERE ARE MANY UNANSWERABLE QUESTIONS AT THIS TIME. HOW WIDELY AND WHAT DURATION WILL THE VIRUS SPREAD? WILL THERE BE A VACCINE IF SO WHEN? HOW WILL THE ECONOMY AND THE INDIVIDUAL PEOPLE WHO MAKE UP ECONOMY REACT IN A SHORT-TERM? AND WHAT MAY BE THE LONGER-TERM SOCIAL AND ECONOMIC RESPONSES? THERE MANY REALLY UNANSWERABLE QUESTIONS AT THIS POINT. THERE’S ALSO A LACK OF CURRENT DATA. OFFICIAL DATA SOURCES GENERALLY RUN 3 TO 6 MONTHS BEHIND. ESPECIALLY WHEN WE LOOK AT THE COUNTY OR THE CITY LEVEL. AND BECAUSE THIS IS UNCHARTED TERRITORY THERE IS REALLY A LACK OF PREDICTIVE MODELS. SO BECAUSE THERE IS HIGH UNCERTAINTY THERE IS A LACK OF CURRENT LOCAL DATA AND THERE REALLY ISN’T AN ELIGIBILITY TO PREDICT. WE REALLY HAVE TO TURN TO PAST EXPERIENCE AND PROFESSIONAL JUDGMENT AND MAY BE A LITTLE BIT OF PROFESSIONAL IMAGINATION. RATHER THAN PREDICTIONS OR FORECASTS. WE REALLY FEEL LIKE IF WE STRIVE TO HAVE SOME ADDICTIONS WITHOUT GOOD DATA AND MODELS IT COULD REALLY GIVE US A FALSE SENSE OF CERTAINTY. AND REALLY BLIND US TO THE RANGE OF WHAT MIGHT COME NEXT. SO WHAT WE DECIDED TO DO IN THIS PRESENTATION IS REALLY TRY TO REDUCE ALL THE ECONOMIC COMPLEXITY AND UNCERTAINTY DOWN TO THE ESSENCE OF WHAT REALLY MATTERS FOR OUR LOCAL CITY BUDGET. SO FOR THIS PRESENTATION WE STRUCTURED THIS ECONOMIC OUTLOOKTHIS YEAR SIMPLY TO CONSIDER ARE THREE MAIN REVENUE SOURCES. SALES TAX , DEVELOPMENT FEES AND TAXES AND PROPERTY TAXES. AND FOR EACH OF THOSE TO CONSIDER WHAT IS HAPPENING NOW. BASED ON WHAT WE ARE HEARING FROM BUSINESS AND THE COMMUNITY WHAT DO WE THINK MAY HAPPEN NEXT IN THE NEAR TERM. AND THEN ULTIMATELY IN THE LONGER-TERM I WANT TO SINCE I HAVE THEFLOOR I WANT TO GIVE SOME PUBLIC RECOGNITION TO CHRIS BURTON CHRIS IS THE DEPUTY DIRECTOR OF ECONOMIC DEVELOPMENT WHO OVERSEES BUSINESS DEVELOPMENT AND ECONOMIC STRATEGY. HE’S BEEN AN INCREDIBLE PARTNER WITH NANCY KLEIN AND ME IN LEADING OED AND THE CSA. IN THE LAST SEVERAL MONTHS HE’S BEEN A FANTASTIC COMANAGER WITH ME AND THE LIAISON BRANCH AND THE EEOC. CHRIS CREATED THIS PRESENTATION THE LAST COUPLE DAYS AND I THINK YOU’LL FIND HE’S A TERRIFIC ECONOMIC THINKER ANDCOMMUNICATOR. SO CHRIS BURTON >> THANKS KIM . CAN WE MOVE ON JIM LET’S GET ANOTHER SLIDE FORWARD. THE SPACE THE KIM JUST COVERED. THANKS KIM I APPRECIATE THAT. I’M CHRIS BURTON ZACHARY DIRECTOR OF OED I WANT TO GIVE A LITTLE BIT OF ECONOMIC CONTEXT AROUND THE PANDEMIC. AND ESPECIALLY AROUND THE NECESSARY MEDICATION. WHICH REALLY WE ARE IN UNPRECEDENTED AS KIM SAID UNCHARTED TERRITORY. AND TODAY WE VERY MUCH REMAIN IN AN ACUTE PHASE OF THIS CRISIS MODIFICATIONS TO THE COUNTY ORDER STILL ONLY ALLOWING SMALL AMOUNT OF BUSINESSES RETURNING TO THE WORKPLACE. OUR CURRENT ECONOMIC CONDITIONS CONTINUE TO BE DEFINED BY THE SHELTER IN PLACE ORDER. THIS MEANS THAT WE ARE FACED WITH A CRISIS THAT IS NOT THE RESULTS OF ACTUAL ECONOMIC RECOURSE. THIS IS WHY WE ARE IN THIS UNCHARTED TERRITORY. IT’S MERELY A RESULT OF HAVING TO SHUT DOWN THE LARGE SECTIONS OF THE

ECONOMY. AND THAT INCLUDES MOST MANUFACTURING RESTAURANTS RETAIL HOTELS AND TRAVEL. SO THE KIND OF CREATES A PARADOX IN THIS SORT OF LACK OF REAL-TIME DATA THAT KIM IS DISTRACTED DRIVING. MAKES IT REALLY DIFFICULT TO PREDICT HOW THE ECONOMY WILL REBOUND AS WE STARTTO EMERGE FROM SHELTER IN PLACE. AND SO THERE IS BEEN A NUMBER OF DIFFERENT SCENARIOS THAT PEOPLE HAVE BEEN TALKING ABOUT. I WANT TO TOUCH ON THEM AND RECOGNIZE THEM BRIEFLY IN HIS PRESENTATION. AND JUST SORT OF UNDERSTAND KIND OF WHAT WE ARE SEEING . GIVEN THE NATURE OF SHELTER IN PLACE THERE CERTAINLY DIVERSITY IN THE SCENARIOS AND STEPHANIE BECOMING A BIT OF A KEYBOARD OF SCENARIOS THAT WE ARE SEEING THE FIRST BEING PEOPLE TALKED ABOUT OF THE SHIPPER’S RECOVERY. GIVEN THE IMMEDIACY OF THE SHOP AND IMMEDIACY OF THE IMPACT. THAT’S WHAT WE’VE SEEN IN THE ECONOMY. THIS POTENTIAL IS THE REMOVAL OF THE SHELTER IN PLACE ORDER WILL RESULT IN BOTH RETURNING TO WORK RELATIVELY QUICKLY PEOPLE GET BACK TO SHOPPING AND SO NORMALCY WILL ENSUE. AND AS SUCH WE WILL SEE SOME LEVEL OF RECOVERY. AN EXTENDED NATURE OF THE CURRENT SHELTER IN PLACE I THINK IF WE WORK TO SEE THE SCENARIO IT STEPHANIE BECOMING MORE OF A YOU THEN HAVE E. AND THE LONGER THE CHILDREN PLACE GOES THAT’S GOING TO EXTEND OUT. THE NEXT ONE FOLKS TALKED ABOUT IS AN L-SHAPED PATH TO RECOVERY WHICH IS REALLY THE WORST CASE SCENARIO. OF THE THREE. IN THAT SENSE WE SEEN THIS VERY STEEP DECLINE IN ECONOMIC OUTPUT AS WE HAVE SEEN THE ONSET OF COVID AND SHELTER IN PLACE ORDER. AND THE RECOVERY WILL REMAIN RELATIVELY FLAT FOR HER. A LONG PROTRACTED PERIOD SORT OF GROWTH OUT OF THAT SITUATION PROBABLY THE MOST LIKELY OUTCOME IS ALMOST A W. WHICH IS WHAT WE SEE SOME IMMEDIATE GAINS FOLLOWING THE INTRO OUT AND HAVE SHELTER IN PLACE. AS A RESULT OF ECONOMIC SHOCK WHICH IS MAJOR BUSINESS FAILURES OR THE EVENT OF SUBSEQUENT OUTBREAKS OF THE VIRUS. THAT WILL MAKE HIS RETURN TO SHELTER IN PLACE MAKE US THIS IS SORT OF IN AND OUT UP AND DOWN AROUND RECOVERY. SO THE DURATION ULTIMATELY THE TRANSITION OUT OF SHELTER IN PLACE ARE REALLY THE DEFINING FACTORS OF HOW THE REGION BEGINS TO STABILIZE AND ULTIMATELY BEGINS THE RECOVERY PROCESS. WE ARE ALSO SORT OF CONSCIOUS OF THOSE IMPACTS AT THE STATE AND FEDERAL ASSISTANT PACKAGES AND THESE FUNDS BECOME EXPENDED DEPENDING ON WHETHER OR NOT THERE ARE SUBSTANTIVE GROUNDS FOR STIMULUS. WE WILL START TO GET A MUCH CLEARER PICTURE OF THE REAL ECONOMIC IMPACT WHICH BASED ON OUR EXPERIENCE IN THE PREVIOUS ADMINISTRATION WILL PROBABLY EXTEND OUT OVER 2 TO 3 YEAR TIMEFRAME PLEASE JIM? SO SKIN MENTIONED WE ARE GOING TO TOUCH ON THREE AREAS THE FIRST ARE THE DRIVERS A SALES TAX. WHICH IS KIND OF A PROXY FOR CONSUMER SPENDING AS WELL. CONSUMER CONFIDENCE BUT IT’S ALSO AN IMPORTANT SOURCE OF GENERAL FUND REVENUE WHILE SALES TAX IS STILL AS JIM WAS MENTIONING AS A WHOLE DIVERSE NUMBER OF TRANSACTIONS AND AREAS. WE OFTEN USE THE RETAIL SECTOR IS THE MOST VISIBLE KIND OF MEASURE WHEN CONSIDERING THE IMPACT OF THE PANDEMIC. AND SO AS WE KNOW RIGHT NOW STOOD DIRECTOR OF SALES TAX OR PRODUCING BUSINESSES ARE PARTIALLY CLOSE SOME BUSINESSES HAVE SUCCESS OFFENSIVELY TRANSITION TO ONLINE SALES. WE SEEN OTHER ESSENTIAL BUSINESSES THAT HAVE INCORPORATED CURBSIDE PICKUP INTO THEIR MODEL. AND SO WILL WE SEE THE SALES TAX RECEIPTS FOR THIS. AFTER THAT KIND OF DELAY PROCESS IT’S CLEAR THAT WE WILL SEE THAT SHARP DECLINE IN REVENUES AS A RESULT. BUT THEN WE WILL ALSO AS WE MOVE INTO KIND OF THE NEAR-TERM IMPACTS I THINK WE WILL CONTINUE TO SEE DISRUPTION AND AS WE UNDERSTAND THE IMPACT IN SOME OF THE SMALLER MORE INDEPENDENT RETAILERS. WHEN ISSUE WITHIN THAT I THINK WILL BE CLOSELY FOLLOWING HIS WORKER AVAILABILITY. WE’VE ALSO SEEN AND HEARD FROM A COUPLE BUSINESSES THAT COULD BE OPEN BUT INITIALLY CLOSED THAT THEIR EMPLOYEES ARE CONCERNED ABOUT RETURNING TO WORK. AND THAT’S ON A SAFETY BASIS. BUT BECAUSE OF THE FEDERAL ASSISTANCE THEY CAN CONTINUE TO STAY AT HOME THE SAME IS TRUE FOR CUSTOMERS AND THEIR PERCEPTION OF THE HEALTH CRISIS. IT’S MORE LIKELY THAT THAT THOSE PERCEPTIONS WILL DRIVE CONSUMER HABITS AND GET TO A HEALTH ORDER. AND THEN LONG-TERM I THINK THERE ARE THREE DEFINING FACTORS THAT WILL ULTIMATELY IMPACT SALES TAX. FROM A BUDGET PERSPECTIVE. THE FIRST IS THE QUESTION OF HOW MANY TRANSACTIONS CONSUMERS HAVE BEEN FORCED TO MOVE ONLINE BECAUSE OF THE PANDEMIC. AND HOW MANY OF THOSE WILL ACTUALLY’S STAY ONLINE. THE CONVENIENCE OF ONLINE SHOPPING AS WE OPEN UP AT HOME ESPECIALLY AS DELIVERY TIMES CONTINUED TO COME DOWN. MAKE CHANGE CONSUMER BEHAVIOR SIGNIFICANTLY IN SUBSEQUENT YEARS. THE SECOND THAT WITH ANY SLOWDOWN OR ECONOMIC SHOCK CONSUMERS CONSERVE RESOURCES SO THEY’RE LESS LIKELY TO MAKE SOME OF THOSE MAJOR PURCHASES LIKE THINGS LIKE APPLIANCES AND VEHICLES.. AND LASTLY WE ANTICIPATE AN ACCELERATION IN THE RETAIL INDUSTRY. AS WE LOOK BACK TO THE LAST RECESSION WE SAW NONE SARA LEE THE

RECESSION ITSELF IMPACTED THOSE RETAILERS BUT IN THE YEARS FOLLOWING THE CONSUMER HABITS AND SPENDING PATTERNS ALTERED SOME OF THE FOCUS OF THOSE RETAILERS AND THAT WE RUN INTO DIFFICULTIES AND WE SAW A NUMBER OF CLOSURES WE’VE ALREADY HEARD PRE-PANDEMIC THAT THERE ARE A COUPLE OF MAJOR BOXWOOD TAILORS THEM ARE STRUGGLING. AND CERTAINLY THROUGH THIS. WE ARE HEARING MORE ABOUT THAT. SO THAT WILL BE THE THIRD SORT OF AREA THAT WE WILL LOOK AT. CLOSELY PLEASE JIM. FOR EACH OF THESE AREAS WANTED TO GIVE YOU A FEW DATA POINTS JUST TO GIVE YOU THE CONTEXT SO IN THE SLIDE THAT WE USED IN THE PAST TO DEMONSTRATE OUR SALES TAX TRENDS WILL DONE THIS PRESENTATION SO THIS IS JUST THE ONE PERCENT THAT WE’VE DONE IN SALES TAX. IN THE ANNUAL FIGURES IN THE WE HAVE THE CONSTANT $2008 TO SHOW THE RELATIVE CHANGE OF THE TIME EVEN PRIOR TO THE CURRENT CRISIS ARE RELATIVE SALES TAX REMAINED FLAT. OVER THE LAST 15 YEARS SINCE 2008. AND IN PART THAT WAS BECAUSE OF THAT TRANSITION TO ONLINE SALES. IN SALES TAX WORKING. AS JIM IS MENTIONED IN THE CURRENT BUDGET FORECAST A PROJECTED SALES TAX REVENUE WILL DECLINE IN THE COMING YEAR. AND SO OBVIOUSLY THIS WOULD HAVE BEEN HIGHER WITHOUT THE AGREEMENT WITH EBAY THAT WE HAVE MENTIONED. BUT PRETTY MUCH WHEN YOU CONSIDER ALL OF THOSE FACTORS IT PRETTY MUCH PUTS US BACK TO THE 2008 LEVEL. AS YOU CAN SEE FROM THE BOTTOM OF THE LAST RECESSION IT TOOK ABOUT TWO OR THREE YEARS TO GET OURSELVES BACK TO THE CURRENT LEVELS. AFTER WE HIT THAT BOTTOM. THAT IS THE KIND OF TIMEFRAME JUST LOOKING BACK THAT WE THINK IT’S GOOD CONTEXT TO KEEP IN MIND. NEXT SLIDE JIM . SO THIS NEXT ONE IS AGAIN ONE OF THOSE EXAMPLES OF CREATIVE DATA SOURCES THAT HER TEAM IS EXPLORING. IN THE KIND OF ABSENCE OF REAL-TIME DATA AND SO THIS IS YOUR YEAR PERCENTAGE CHANGE IN AREA RESTAURANT WORKINGS FROM OPENTABLE. WHILE WE THINK THIS IS IMPORTANT BECAUSE WHEN IT’S MAPPED AGAINST ONE OF THOSE MAJOR MILESTONES LEADING UP TO THE SHELTER IN PLACE IT’S CLEAR THAT CONSUMERS HAVE AN APPRECIATION FOR THE HEALTH CRISIS IN THE TWO WEEKS PRIOR TO THE ACTUAL ORDER OF SHELTER IN PLACE. WE THINK THAT IS GOING TO BE THE CASE AS WE COME OUT OF SHELTER IN PLACE AS WELL. THIS CONSUMER PERCEPTION OF WHETHER OR NOT THEY FEEL COMFORTABLE WITH THE PUBLIC HEALTH SITUATION IS WHAT’S GOING TO DRIVE THIS AND IN THE NEW PATTERNS OF BEHAVIOR BEHAVIOR. RATHER THAN THE SORT OF SHELTER IN PLACE ENDS WE ALL MOVE BACK TO HOW IT WAS BEFORE NEXT SLIDE PLEASE JIM. SO THE NEXT DRIVER WE WANTED TO TALK ABOUT WAS DEVELOPMENT AND THAT HAS IMPACT ON DEVELOPMENT FEES AND TAXES. AS WE PREVIOUSLY DISCUSSED WITH COUNSEL CONSTRUCTION HAS BEEN SEVERE SEVERELY DISRUPTED BY SOCIALS IN PLACE ORDER. THE PROJECTS ARE NOW BACK UNDERWAY AND WORKING TO COMPLETE . WHILE RESIDENTIAL PROJECTS ARE MOVING TO COMPLETE THEIR CONSTRUCTION AS QUICKLY AS POSSIBLE THERE SOME EARLY SIGNS OF HESITATION IN THE COMMERCIAL MARKET. AND WE WILL LIKELY SEE SOME OF THOSE PROJECTS SLOWDOWN TO UNDERSTAND HOW THE MARKET IS GOING TO RESPOND. IN THE COMING MONTHS. THEY’RE OBVIOUSLY GOING TO BE CHANGES TO THE WAY WE THINK AND USE THINK ABOUT AND USE WORKSPACES IN THE NEAR FUTURE. OVER THE PAST 10 YEARS THAT TREND IS GENERALLY BEEN TO INCREASE EMPLOYEE DENSITY SO PUT MORE PEOPLE IN THE SAME SPACES BUT NOW BECAUSE OF SOCIAL DISTANCING PLUS SOME OF THE CARRIER OVER FROM SOME OF THE EMPLOYEES WORKING FROM HOME AND TELECOMMUTE. WE THINK THAT PEOPLE ARE THINKING DIFFERENTLY ABOUT WORKSPACES AND DEVELOPERS WILL PROBABLY LIKELY WANT TO SEE HOW SOME OF THOSE TRANSITIONS PLAY OUT. BEFORE COMMITTING DOLLARS. SOME NEAR TIME WE MAY SEE SOME BRIEF UPTICK IN PERMITTING AND LEASING ON THE COMMERCIAL SIDE ESPECIALLY ON EXISTING SPACES AND THAT’S BUSINESSES WE UNDERSTAND THE NEED TO SPREAD OUT AND LOOK TO REDESIGN THOSE SPACES. IT ALSO MEANS THAT WE WILL SEE A SIGNIFICANT FLOW OR SLOWING OR STOPPING AND COMMERCIAL DEVELOPMENT. IN THE LONG-TERM WE EXPECT DEVELOPMENT ECONOMICS FOR RESIDENTIAL WORK WILL EXPLAIN WILL REMAIN SAME VERY DIFFICULT. THE PRIME CHALLENGE VERY WELL BE MISALIGNMENT BETWEEN CUSTOMER RETURNS. WHILE RENTS LIKELY WON’T GO DOWN FOR RESIDENTIAL THE RATE INCREASE MAY SLOW WHICH IS WHAT’S GOING TO GIVE INVESTORS AND FINANCE A CAUSE TO NOT INVEST IN NEW PROJECTS AT THE SAME TIME WHILE CONSTRUCTION COSTS CAN GENERALLY GO UP QUICKLY TO TEND TO TAKE A LOT OF TIME TO COME DOWN. THIS PROBABLY GOING TO BE COMPOUNDED BY DISRUPTION AND MATERIAL SUPPLY CHAINS AND THE LABOR AVAILABILITY AS WELL TOO SO COMBINE THESE FURTHER INCREASED THE PRESSURE ON THE REGION’S HOUSING AND FOR ABILITY ON PRICING. IN THE LONG TERM WE THINK THERE’S OPPORTUNITY FOR DEVELOPMENT REMAINS TO BE THE SORT OF LARGE PRIVATE FINANCE COMMERCIAL DEVELOPMENT PROJECTS ESPECIALLY GIVEN THE CONTINUED FOCUS WE ARE IN TRANSIT. WHICH MEANS A DOWNTOWN INTERIOR DONE GOING TO CONTINUE TO BE IMPORTANT FACTORS IN THE

RECOVERY PROJECTS LIKE GOOGLE AND J PAUL AND WEST BANK PORTFOLIO. REPRESENT OUR BEST POTENTIAL FOR COUNSEL OPPORTUNITIES AROUND DEVELOPMENT. ANOTHER IMPORTANT FACTOR JUST TO KIND OF BEAR IN MIND IS THE IMPACT OF ZONES SO BILLIONS OF DOLLARS WILL LITERALLY PLACED IN THE ZONES PRIVATE TO THE COVERT PRICES IN THOSE SO FUNDS ARE TO LOOK TO DEPLOY IN THE COMING YEARS AND THEY HAD CERTAIN MILESTONES. AND AGAIN DOWNTOWN IN THAT CONTEXT BECOMES A SIGNIFICANT ASSET. FOR CYCLICAL DEVELOPMENT PLEASE JIM. SO AGAIN JUST TO PROVIDE SOME OF THAT CONTEXT ON THE LAST RECESSION NEXT COUPLE OF SLIDES TO SHOW BOTH THE COMMERCIAL AND RESIDENTIAL DEVELOPING MARKETS. IT’S WORTH NOTING THAT THESE CHARTS ARE FROM POST ARE THEY MAY LOOK A LITTLE DIFFERENT THAN WHAT YOU ARE USED TO SEEING BASED ON PERMITTING DATA. WITH THE FIRST CHART SHOWS CONSTRUCTION STARTS IN SQUARE FEET AND VACANCY RATE IN OUR OFFICE MARKET OVER THE LAST 15 YEARS WHAT’S IMPORTANT TO NOTE ON THIS CHART IS HOW MUCH WE UNDERPERFORMED DURING THE LAST EXPANSION. SO MANY OF THOSE VERTICAL BARS REPRESENT SINGLE PROJECTS WHICH WE CAN CALL OUT THE PROJECTS SO DURING THE LAST RECESSION WAS RIVERPARK AND THE ORACLE BUILDING. WE’RE GOING UP DURING THAT PERIOD AND WE SEE THAT SIGNIFICANT DROUGHT FOR THE FIVE YEARS AND THEN YOU HIT Q3 2013 AND THAT SAMSUNG LITERALLY. AND THEN YOU START SEEING SUBSEQUENT YEAR’S ADDITIONAL PROJECTS AND THAT’S CALLED THE HIGHLINE. IN A COUPLE OF OUR KEY PROJECTS COMING ONLINE. WE ALSO CONTRIBUTED TO SORT OF LACK OF DEVELOPMENT WAS THE REPOSITIONING OF RENOVATION AND REPURCHASING OF SOME OF THOSE EXISTING BUILDING STOCK. WHICH WAS A FAR SAFER INVESTMENT IN CONSTRUCTION NEW DURING THAT PERIOD. SO GIVEN THAT SIGNIFICANT AMOUNT OF MAJOR RELOCATION AND EXPANSION ALIKE LIKE BE ON HOLD FOR SOME TIME AND IF THERE IS STILL CAPACITY IN OUR EXISTING MARKET WE WILL SLIGHTLY SEE A SIMILAR SLOWDOWN OVER THE NEXT 2 TO 3 YEARS PLEASE JIM. AND THEN WE HAVE A SIMILAR CHART FOR MULTIFOCAL FAMILY RESIDENTIAL BUT THIS TIME WE ARE MEASURING CONSTRUCTION STARTS AGAINST MARKET RENTS. WHICH IS THE IMPORTANT FACTOR IN ATTRACTING INVESTMENT SO SIMILARLY WE CAN SEE THE SIGNIFICANT DEVELOPMENTS AND EVENTS SHOWING UP IN THAT TIMELINE. SO LITTLE TO NO MULTIFAMILY RESIDENTIAL CONSTRUCTION COMING OUT OF THE LAST RECESSION. UNTIL YOU HIT SORT OF THE 2011 THROUGH 2013 WHICH IS THE UPWARD TRAJECTORY IS ALL THOSE EXISTING ENTITLEMENTS IN NORTH SAN JOSE THAT BECAME REALLY GOOD OPPORTUNITY AS THAT RENT LINE STARTED TO MOVE UP AND PREDICTABLE WAY. AND THAT’S WHEN 18 SPIKE IS ULTIMATELY THE RESULT OF THE DOWNTOWN HIGH-RISE WORK. THAT SORT OF EURO GRADUATE WORK IN CONSTRUCTION. SO NEXT SLIDE PLEASE JIM. SO ALLOW LAST OF THETHREE AREAS AND JIM IS ALREADY TOUCHED A LITTLE BIT ON PROPERTY TAX AND WHY IT’S KIND OF DIFFERENCE IN SALES TAX. IN DEVELOPMENT AND WHILE WE SORTA SEE THIS LONG RETURN FRIENDS WHEN IT COMES TO PROPERTY TAX WE WANTED TO TOUCH ON THIS BRIEFLY . AS WE SEE IT TODAY THE VALUES ARE BASED ON JANUARY 1 VALUATIONS PROPERTY TAX PAYMENTS REDO EARLY IN THE PANDEMIC AND THAT’S WHAT’S GIVING US THAT STEADY PROJECTION OVER THIS COMING YEAR. BUT IN THE NEAR TERM I THINK REALLY WILL RESTART TO SEE THE SORT OF CHANGES IN THE WAY WE THINK ABOUT PROPERTY TAX IS AROUND PROPERTY SALES. AND THAT’S BECAUSE THESE TAXES ARE GENERALLY ASSESSED AND COLLECTED I’M SORRY ASSESSED AS AS A RESULT OF MAJOR SHIFT ON SALES. REALISTS EXPECT TO SEE A DECLINE ON THE AMOUNT OF COMMERCIAL PROPERTY SALES AS OWNERS, WAY OUT THE TRANSITION IN THE MARKET. UNDERSTAND WHAT THE IMPACT IS ON VALUATIONS SIMILARLY IN THE SINGLE-FAMILY RESIDENTIAL MARKET I THINK WE WILL SLEEP SEE A SLOWDOWN IN THE VOLUME OF SALES IN THE NEXT TWO YEARS. BUT AGAIN IT WILL BE INTERESTING TO SEE WHAT HAPPENS WITH VALUES AND PRICES JUST GIVEN THAT WE ARE STILL IN THE MIDST OF THE HOUSING CRISIS. THERE ARE OTHER SORT OF SOCIAL FACTORS THAT ARE YET TO BE SO WHAT’S THE IMPACT OF PEOPLE’S PERCEPTION ON THEIR PERSONAL SPACE? DOES THE VALUE OF HAVING A SINGLE-FAMILY HOME IN THE GARDEN CONTEXT OF SHELTER IN PLACE CHANGE PEOPLE’S PERCEPTION ON WAY THEY WANT TO LIVE? AND THEN ULTIMATELY LONG-TERM WE EXPECT TO SEE SALES AND VALUE START TO SLOW AND MAYBE EVEN DECLINE IN SOME CASES OVER THE NEXT 2 TO 3 YEARS. BUT ULTIMATELY WE WILL BEGIN TO TREND UPWARD. SO KIND OF JUST TO DEMONSTRATE THAT THIS IS KIND OF JUST A CHART THAT SHOWS OUR EXPERIENCE WITH THE COMMERCIAL PROPERTY MARKET THROUGH THE RECESSION THROUGH TODAY. BASED ON VOLUME OF SALES IN DOLLARS IN PRICE PER SQUARE FOOT. AND THIS IS OFFICE INDUSTRIALLY INFLUX THE MAJORITY OF OUR EMPLOYMENT LANDS AND AS YOU CAN SEE NO ONE LIKES TO SELL IN A DOWN MARKET SO PRAY AS PRICES DROP THROUGH LAST RECESSION AZUR-HGAzurcc IT IS ALSO LIKELY OWNERS WILL SEEK TO REASSESS. THROUGH THE DOWNTURN BASED ON A RESUMED REDUCTION, WHICH MAY IMPACT PROPERTY TAX REVENUES. IT IS DIFFICULT TO UNDERSTAND HOW THIS WILL PLAY OUT WHEN YOU ARE USING THE CONTEXT OF THE LAST

RECESSION, GIVEN THAT ECONOMIC EVENT WAS SO CENTERED AROUND MAJOR SHIFTS IN THE REAL ESTATE INDUSTRY AND ECONOMIC THAT SUPPORTS IT. I THINK THE OTHER IMPORTANT NOTE WE ARE THINKING ABOUT IS THAT THROUGH THE LAST EXPANSION, A LOT OF OPPORTUNITY SITES TREATED. IN LARGE PART DUE TO THE GENERAL PLAN, THE OPENING UP OF NEW MIXED-USE OPPORTUNITIES. THESE WILL TEND TO REPRESENT LONGER-TERM HOLDS FOR NEWER OWNERS ORGAN BAR ANY MAJOR FINANCIAL EVENTS FOR THOSE INDIVIDUALS, IT IS UNLIKELY WE WILL SEE ANY MAJOR SELLOFF OF REAL ESTATE. NEXT SLIDE, PLEASE. I WANTED TO CLOSE BY TOUCHING ON A COUPLE REALLY IMPORTANT POINTS,WHICH AREN’T AS DIRECTLY LINKED TO THE BUDGET . CERTAINLY IMPORTANT IN THE CONTEXT OF THE LOCAL ECONOMY AND AS WE THINK ABOUT IT. THE FIRST IS EMPLOYMENT. THIS IS WHERE IT GETS REALLY DIFFICULT TO UNDERSTAND THE DYNAMICS OF THE CURRENT SITUATION BASED ON THE ABSENCE OF DATA. AS WE KNOW, THE NATION FACES UNPRECEDENTED RATES OF UNEMPLOYMENT. JUST UNDER 15 PERCENT OF THE NATIONAL LEVEL. WE EXPECT TO HAVE A MORE ACCURATE LEVEL AT THE LOCAL RATE AND THE NUMBERS AROUND THAT IN THE NEXT WEEK OR SO, BUT WE KNOW IT WILL BE HIGH. GIVEN THE NATURE OF LOCAL INDUSTRIES, IT MAY NOT BE AS HIGH AS THE NATIONAL RATE I READ A RECENT REPORT, WHICH WAS DURING AN ASSESSMENT ON THE RESILIENCE OF MAJOR CITIES TO THE ECONOMIC IMPACTS ASSOCIATED WITH COVID AND SAN JOSE RANKED WELL. IN PART BECAUSE WE HAVE A LOWER PERCENTAGE OF EMPLOYMENT IN HIGH RISK INDUSTRIES THROUGHOUT THE AREA BUT CERTAINLY WITHIN THOSE INDUSTRIES THAT HAVE BEEN IMPACTED, THE EMPLOYMENT LOSSES ARE SEVERE. THE PANDEMIC HIT THE HOSPITALITY SECTORS FIRST AND HARDEST WE HAVE ALREADY SEEN A CONSIDERABLE AMOUNT OF NOTICES AND COMPANIES IN THOSE INDUSTRIES. BUT THEN AS A SHELTER IN PLACE CONTINUED, JOHN LOSSES HAVE RIPPLED THROUGHOUT MULTIPLE INDUSTRIES AND ACROSS DIFFERENT OCCUPATIONS. IN SOME CASES, THELOSSES ARE REPRESENTED BY FURLOUGHS AND TEMPORARY REDUCTIONS , BUT AS WE SEE SHELTER IN PLACE TRANSITION IT WILL BE IMPORTANT TO UNDERSTAND WHAT THOSE TEMPORARY FURLOUGHS WILL BECOME PERMANENT AND ULTIMATELY AT WHICH POINT THEY BECOME PERMANENT. ANOTHER CONSIDERATION IS ALTERNATION, WHICH WAS A DISCUSSION WE WERE HAVING PRIOR TO COVID . IT IS LIKELY POST COVID SOME OF THOSE OCCUPATIONS MOST AT RISK BY FUTURE WILL FACE PERMANENT DISRUPTION AS COMPANIES CONSIDER THE BEST WAY TO DEAL WITH OTHER DISRUPTIONS IN THEIR WORKFLOW, SIMILAR TO THIS IN THE FUTURE. AND SO AS A RESULT, FOLKS IN THIS OCCUPATION FACED INCREASED RISK OF NOT RETURNING TO WORK AS COMPANIES START TO ACCELERATE INNOVATION. WE WANTED TO INCLUDE THE MOST RELEVANT DATA POINT WE HAVE ON UNEMPLOYMENT, WHICH IS CLAIMS. IT IS IMPORTANT TO KNOW THIS ISN’T A REPRESENTATION OF THE UNEMPLOYMENT RATE, IT’S THE NUMBER OF CLAIMS ON A WEEKLY BASIS. IT IS IMPORTANT TO UNDERSTAND THIS NUMBER ISN’T GOING DOWN, IT IS JUST THAT THE RATE OF RECENTLY UNEMPLOYED IS DECREASING OVER TIME. AFTER THE INITIAL SHOCK OF THE SHELTER IN PLACE. AS YOU CAN SEE, MOST RECENTLY THE INTRODUCTION FOR SELF-EMPLOYED RESIDENCES BECOME AVAILABLE IN THE LAST WEEK OF REPORTING HERE THAT IS WHERE YOU ARE SEEING A SUBSEQUENT INCREASE ON THE BACKEND. NEXT SLIDE, PLEASE, JIM. LASTLY, WE WANTED TO CLOSE BY TOUCHING ON THE INDIVIDUAL EXPERIENCE OF THE CURRENT ECONOMIC CRISIS. WHILE IT IS VERY MUCH GLOBAL IN NATURE AND MUCH OF THE DISCUSSION YOU WILL HEAR FOCUSES ON THE CITY LEVEL THE COUNTY LEVEL, THE STATE LEVEL OR EVEN NATIONAL LEVEL, THE IMPACT OF THE CRISIS IS BEING EXPERIENCED BY INDIVIDUALS ON A VERY PERSONAL LEVEL AND THAT EXPERIENCE SIGNIFICANTLY THROUGHOUT THE CITY ULTIMATELY, THE HIGHEST IMPACT IS CLEARLY BEING EXPERIENCED BY OUR MOST VULNERABLE POPULATIONS. THE UNIQUE NATURE OF THIS ECONOMIC CRISIS OR MORE THE DIFFERENCE FROM HIGHER ONES IS THAT DURING THE GREAT RECESSION, THE LOCAL ECONOMIC IMPACT ON INDUSTRY LEVEL. BUT BECAUSE OF THE ALMOST SUSPENDED ANIMATION OF THE PHYSICAL ECONOMY RIGHT NOW, PEOPLE WHO NEED TO BE PHYSICALLY AT THEIR PLACE OF WORK DURING THIS CRISIS ARE DISPROPORTIONATELY IMPACTED. THIS MEANS THAT IMPACT IS OCCURRING AT THE OCCUPATIONAL LEVEL RATHER THAN THE INDUSTRY ONE AND AS SUCH WE HAVE BEEN ACTIVELY TRYING TO WORK AND UNDERSTAND AND QUANTIFY WHAT THE IMPACT IS SO IT CAN PLAN ANDACT ACCORDINGLY SO ULTIMATELY WHEN YOU BREAK DOWN BY OCCUPATION , YOU CAN SEE THE DATABASE ON A TYPICAL EDUCATION REQUIREMENT AND GROUP THEM INTO WHAT YOU NEED TO DO A CERTAIN JOB. YOUR ENTRY LEVEL, WHICH ARE THOSE WITH HIGH SCHOOL DIPLOMAS OR LESS, MIDDLE SCHOOL JOBS WHICH HAVE SOME COLLEGE OR AN ASSOCIATES DEGREE

IN HIGH SCHOOL, WHICH IS A BACHELORS IN ABOVE. NEW CROSS REFERENCE THE INFORMATION WITH OTHER DATA ON WHETHER THESE WORKERS CAN WORK FROM HOME , THERE HAS BEEN A COUPLE STUDIES ON THAT. WITH THESE OCCUPATIONS ARE ALREADY DECLININGPRIOR TO COVID , HOW THESE WERE AFFECTED BY THE LAST RECESSION . IT IS IMMEDIATELY APPARENT IT IS ENTRY-LEVEL WORK AS THE HIGHEST RISK OF BEING IMPACTED. THESE INCLUDE FOOD PREPARATIONS AND SERVING WORKERS, CASHIERS, WAITRESSES, MAIDS ANDHOUSEKEEPERS, LANDSCAPERS AND GARDENERS AND MANY OF THEM , A MAJORITY FEMALE WORKERS, MANY OF THEM MAJORITY HISPANIC OR LATINO WORKERS. AND THE MEDIAN ANNUAL EARNINGS RANGE FROM 25,000 TO ABOUT $49,000 A YEAR. THIS IS AN IMPORTANT FACTOR AS WE PLAN FOR AND ENGAGE IN STABILIZATION OF THE LOCAL ECONOMY IN THE COMING MONTHS. WE NEED TO KEEP THAT PERSPECTIVE TOP OF MINE ESPECIALLY BECAUSE MANY OF THESE TYPES OF WORKERS AND COMMUNITIES ARE ALREADY STRUGGLING PRIOR TO COVID AND SO WITH THAT I WILL HAND IT BACK TO THE BUDGET TEAM >> JIM, YOU ARE NEW TO >> THANK YOU VERY MUCH. LET’S SWITCH SLIDES ONE MORE TIME HERE. GREAT. I JUST WANTED TO MOVE THROUGH A LITTLE BIT ABOUT THE OVERALL BUDGET NOW THAT WE HAVE THE CONTEXT. HERE IS A DON’T OR THE SLICES LOOK ABOUT THE SAME. WE DO HAVE A DIVERSE ARRAY OF REVENUE SOURCES WHICH HAS BEEN IMPORTANT FOR US. A LITTLE BIT OF A BUFFER AND SOME OF THEOTHER CATEGORIES WILL TAKE A BIG DROP LIKE SALES TAX YOU CAN SEE THE SALES TAX REPRESENTS 18 PERCENT OF THE GENERAL FUND, PROPERTY TAX 28 PERCENT . WE DOHAVE A GOOD CHUNK OF FRANCHISE AND UTILITY TAXES , 10.7 PERCENT. THOSE ARE ALSO GOING TO BE IMPACTED AS WELL, BUT NOT TO THE EXTENT SOME OF THESE OTHER CATEGORIES ARE. TOT, WHICH IS A VERY SENSITIVE PORTION OF OUR GENERAL FUND REVENUES IS A PRETTY SMALL SLICE. IT IS YEAR AND THE OTHERS. IS AROUND THE ONE PERCENT , A LITTLE BIT ABOVE THAT. BUT REALLY, THERE IS A LOT OF PORTION OF THAT TOT GOES TO FUND SPECIAL FUNDS HELP WITH THE CONVENTION OPERATIONS TO HELP WITH GRANTS PROGRAM, WHICH WILL TAKE A BIGGER IMPACT THERE. NEW ON THIS IS A REAL PROPERTY TRANSFER TAX. THOSE ARE THE PROCEEDS FROM MEASURE THIS IS THE NEW WEDGE TO THE PIE FOR THE FIRST TIME SINCE THEY PASSED THAT BACK IN MARCH, WHICH WILL BE EFFECTIVE ON JULY 1. OVERVIEW OF THE BUDGET IN GENERAL. I HAVE IT BACKWARDS HERE. A TOTAL BUDGET OF 4.1 BILLION, ABOUT 130 FUNDS ARE POSITION COUNT AND 6500, DOWN 103 FROM LAST YEAR. YOU CAN SEE THE SLICES OF THE PIE HERE, WE HAVE THE GENERAL FUND IS ABOUT 26 PERCENT, CAPITAL FUNDS 22 PERCENT AND SPECIAL FUNDS ABOUT 82 PERCENT. SPECIAL FUNDS ARE GENERALLY THOSE FUNDS THAT THE REVENUES ARE RESTRICTED BY NATURE BASED ON WHAT THE SERVICES ARE PROVIDED SO THE AIRPORT OPERATIONS FOR THE WASTEWATER TREATMENT PLANTS. FOR EXAMPLE, THE WATER PROGRAM. ALL THOSE PROGRAMS WE CALL SPECIAL FUNDS AND THEY ARE GENERALLY NOT AVAILABLE TO BE USED FOR ANY OTHER GOVERNMENT PURPOSE LIBRARY FIRE. STUFF LIKE THAT. WE LOOK AT HOW WE SPEND OUR MONEY, WE ARE POWERED BY PEOPLE. AND SO THE MAJORITY OF WHAT WE SPEND OUR MONEY ON OUR PERSONAL SERVICES. THESE ARE LABOR CHARGES. THAT ACCOUNTS FOR 67 PERCENT OF OUR EXPENDITURES. WE HAVE A SMALLER SLICE OF OUR NONPERSONAL EQUIPMENT EXPENDITURES, WHICH IS CONSULTANT SUPPLIES, MATERIALS, CITYWIDE EXPENSES WHICH ARE THOSE THAT ARE CUT ACROSS MULTIPLE DEPARTMENTS. WE HAVE A LITTLE BIT OF SLICER CAPITAL CONTRIBUTIONS. JUST TO MAINTAIN A LITTLE BIT OF OUR BUILDUP OF STRUCTURE THAT IS GENERAL FUND FUNDED. WE HAVE TRANSFERS, WE HAVE A NUMBER OF THINGS THAT ARE EARMARKED FOR SPECIFIC RESERVE PURPOSES OR A PART OF OUR CONTINGENCY RESERVE AND THAT MAKES UP THE BALANCE OF WHAT WE GENERALLY SPEND OUR MONEY ON. AND THE TYPES OF USES, LIKE MANY CITIES, WE SPEND A LOT OF OUR COST ON PUBLIC SAFETY. ONE HOUR COURT RESPONSE ABILITIES. 52 PERCENT THINK THE PUBLIC SAFETY WEDGE HERE WITH OTHER SLICES BEING CONSIDERABLY SMALLER WHEN WE HAVE THE CAPITAL MAINTENANCE TEMPO DEPARTMENTS LIKE PUBLIC

WORKS, COMMUNITY SERVICES WHICH ARE LIBRARY AND PARKS DEPARTMENTS. OUR NON- DEPARTMENT ALL, THAT’S THE WEDGES CITYWIDE AND TRANSFERS, WHICH MAKES UP A BIG SLICE THERE IN OUR GENERAL GOVERNMENT WHICH IS MORE OF OUR STRATEGIC SUPPORT. AS DAVE MENTIONED TO GO BACK TO THE APPROACH FOR BALANCING THE BUDGET, WE WANT TO MAKE SURE WE BRING ALL OUR FUNDS IN THE BALANCE. WE HAVE THE GENERAL FUND ÃWE ALSO HAVE THE SPECIAL AND CAPITAL FUNDS NEED TO BE MINDFUL OF. WE WANT TO MAKE SURE WE RESOLVE OUR 71.$6 MILLIONPROJECTED DEFICIT WE SOLVE ALL OF IT ON A ONE-TIME BASIS AND WE SOLD ALL BUT 19.7 MILLION OF IT ON AN ONGOING BASIS. I WILL SHOW YOU THAT ON THE SLIDE LATER. BUT BECAUSE OF OUR COMPRESSED TIMEFRAME AND THE UNCERTAINTY, WE CAME FORWARD WITH AN APPROACH THAT BALANCED OUR ONGOING REDUCTIONS WITH OUR ONE-TIME REDUCTIONS TO GIVE A SORT OF A BALANCED APPROACH FOR HOW WE MOVE FORWARD STEP-BY-STEP AS WE MOVE THESE UNCERTAIN TIMES. AS WE WERE PUTTING THE BUDGET TOGETHER, THE IMPACTS ON THE COMMUNITY AND HOW THOSE IMPACTS MIGHT BE DIFFERENT WAS PART OF OUR THOUGHT PROCESS. AS WE WERE THINKING THROUGH IT, WE HAVE THESE PROPOSALS THAT ARE IMPACTING THE COMMUNITY IN THE ORGANIZATION AND THOUGHT OF THEM IN THESE DIFFERENT BUCKETS. ONE OF THEM IS THE COVID-19 IMPACTED SERVICES BECAUSE OF THE SHELTER IN PLACE RESTRICTIONS AND THE THINGS WE HAVE TO DO AS A SOCIETY TO CONTINUE TO COMBAT THE PANDEMIC, THERE WILL BE CERTAIN THINGS WE WON’T BE ABLE TO DO AS A CITY. ESPECIALLY OVER THE NEXT SIX MONTHS. THERE WILL BE SOME SAVINGS BECAUSE OF THAT, WHICH IS RECOGNIZED IN THE BUDGET BUT THERE IS ALSO SERVICE IMPACT RECOGNIZED THINGS LIKE THE SUSPENSION OF THE AQUATICS PROGRAM, THE SUSPENSION OF FAMILY CAMP , ONE-TIME REDUCTION IN COMMUNITY CENTER OPERATIONS. THOSE SORTS OF THINGS ARE RELATED TO COVID AND HAVE IMPACTS. THERE ARE OTHER THINGS THAT A DIRECT SERVICE IMPACT TOO. WHEN WE THINK ABOUT THE PRODUCTION OF LIBRARY HOURS, WHEN WE THINK OF THE CSO PROPOSAL TO REDUCE VACANCY. A VARIETY OF OTHER PROPOSALS THAT ARE PART OF THE BUDGET. THE OF THE STRATEGIC SUPPORT IMPACTS, WHICH WOULD BE THOSE IMPACTS THAT AFFECT DEPARTMENT LIKE FINANCIAL AND HR IN PUBLIC WORKS, WHICH ARE Ã DON’T DIRECTLY IMPACT THE COMMUNITY BUT IMPACT THE ABILITY OF THE CITY TO SUPPORT THOSE FORWARD FACING DEPARTMENTS. WE ALSO HAVE A NUMBER OF PROPOSALS OR A FEW KEY PROPOSALS WITH A BIG IMPACT TO REDUCE OUR GENERAL FUND DEFICIT BUT DON’T HAVE A SERVICE IMPACT. WE ARE ABLE TO STRATEGICALLY USE THOSE PROPOSALS TO HELP SOLVE A LOT OF THE DEFICIT AND WE WILL TALK ABOUT THAT IN A SECOND. AND JUST TO MENTION THE POSITIONS ARE DOWN ABOUT 1 TO 5PERCENT OF THE 100 HER POSITIONS FROM WHERE IT WAS A YEAR AGO. OUR STRATEGY HERE, BROADLY SPEAKING WE HAVE OUR DEFICIT OF 71.6 MILLION . THIS IS HOW THE BUDGET BALANCES IN 2021 AND HOW TO THINK OF IT FROM AN ONGOING PERSPECTIVE. WITH THIS IS HERE IS WE HAVE GOT ÃWE START WITH A DEFICIT OF 71.6 MILLION AND WE HAD $106 MILLION IN VARIOUS SOURCES FROM BEGINNING FUND BALANCE FROM ONE-TIME REVENUE SOURCES AND WE WILL TALK ABOUT THAT IN A SECOND. AND WE HAD A REDUCTION IN EXPENDITURES AND WHEN YOU FACTOR ALL THAT IN, THAT IS HOW WE RESOLVE THE SHORTFALL IN 2021. BUT NOT ALL THE REDUCTIONS ARE ONGOING IN NATURE. AT THE END OF THE DATE WE 19.7 MILLION. ABOUT 30 PERCENT WE SOLVE ON A ONE-TIME BASIS. WHAT THIS NUMBER REPRESENTS IS EVERYTHING BEING EQUAL. WHATEVER IS NEXT YEAR’S DEFICIT WOULD’VE BEEN IN 21/22 YET 19.$7 MILLION TO THAT THAT IS WHY WE ARE CONSCIOUS OF TRYING TO MAKE SURE WE ALIGN ONGOING REVENUE WITH ONGOING EXPENDITURES TO THE BEST AT OUR ABILITY. THIS YEAR IS CHALLENGING SO WE WERE ABLE TO DO THAT AT THE MOMENT AND WE WERE ABLE TO LEVERAGE OTHER SOURCES HERE AND SOME RESERVES THAT WILL HAVE A CARRYOVER EFFECT WHEN WE GET INTO THE BUDGET FOR 21/22. A BRIEF OVERVIEW OF THE GENERAL FUND SOURCES. OF THE 52.4, A SNAPSHOT HERE. WITH THE BUDGET STABILIZATION RESERVE OF 10.9 MILLION, WHICH IS THE DEFICIT WE THOUGHT WE WOULD HAVE IN 2021 YEAR AGO WHEN WE REACHED THAT FORECAST WE ALWAYS SET ASIDE THE MONEY AS PART OF A BALANCING STRATEGY TO MAKE SURE ALL THINGS BEING EQUAL. WE WOULD AT LEAST BE ABLE TO SOLVE

THE DEFICIT ON A ONE-TIME BASIS. AT LEAST WE ARE CASHING IN THE 10.9 MILLION DOLLARS TO HELP US THROUGH. WE ARE RECOMMENDED TO USE A SMALL PORTION OF THE RESERVE SO THAT $32 MILLION RESERVE BALANCE RECOMMENDED USE FIVE MILLIVOLTS OF THAT. TRYING TO RESERVE AS MUCH AS POSSIBLE TO HELP GET US THROUGH. THINGS GET WORSE AND FOR THE FOLLOWING YEARS WHEN WE KNOW WE ARE GOING TO HAVE MULTIPLE YEARS OF STRUGGLING TO BALANCE A BUDGET. ONE PRESERVED THE BUDGET STABILIZATION RESERVE FOR AS LONG AS WE CAN. AND A COUPLE OTHER THINGS I WANT TO POINT OUT. WE HAVE REIMBURSEMENT COMING IN FOR THE DEVELOPMENT PLANNING FROM GOOGLE. THAT PROCESS IS STILL MOVING FORWAR WE HAVE OUR ANNUAL GRANT FROM URBAN AREAS SAFETY INITIATIVES TO FUND POSITIONS IN EMERGENCY MANAGEMENT. WE ARE RECOGNIZING BECAUSE OF THE COVID IMPACTED SERVICES, A LARGE PORTION OF THE REVENUE REPRESENTED HERE FROM REGRESSION NEIGHBORHOOD SERVICES IS RELATED TO THE EXPANSION OF THOSE ACTIVITIES, ALONG WITH ONGOING COMPONENTS FOR SOME OF THE REDUCTIONS. WE DO HAVE RECOMMENDED THE ELIMINATION OF THE LIBRARY FINES FOR JUVENILES. THAT HAS BEEN A SUSPENSION FOR THE LAST COUPLE YEARS RECOMMENDED TO MAKE THAT PERMANENT PERMANENT ABOUT $200,000. AND WE HAVE ANOTHER REIMBURSEMENT GRANTS THAT ARE ALSO PART OF IT. ON THE OTHER REVENUE SIDE, WE HAVE MEASURE E. ESTIMATING ABOUT $30 MILLION IN MEASURE E PROCEEDS THE BUDGET KEEPS IN TACT THE DIRECTION COUNSEL GAVE US BACK IN DECEMBER TO HAVE THOSE REVENUES BE APPLIED FOR HOMELESS SERVICES AND AFFORDABLE HOUSING. YOU SEE THAT IN THE BUDGET DOCUMENT AS INDICATED IN THE MAYOR’S MESSAGE ALSO, WE ARE USING LEVERAGING DEBT IS AN IMPORTANT TOOL HERE. WE HAVE OUTSTANDING DEBT FOR THE CITY HALL LEASE REVENUE BOND. SO WE WILL REFUND A PORTION OF THOSE BONDS. WE WILL BE ABLE TO RECOGNIZE $26 MILLION A ONE-TIME SAVING FROM THE RESERVE PREVIOUSLY SET ASIDE BECAUSE WE HAVE A GOOD CREDIT RATING, WE CAN PULL THE RESERVE OUT, USE THE RESERVE TO PAY DOWN DEBT ELSEWHERE AND GET ONGOING SAVINGS. WE WILL BE ABLE TO PAY OFF THE GOLF COURSE THAT AND WE WILL BE ABLE TO PAY OFF THE DEBT RELATED TO THE STREETLIGHT CONVERSION. THAT WILL GIVE US SOME ONGOING SAVINGS THERE. HERE WE HAVE THE $22 MILLION ON AN ONGOING BASIS, WHICH IS THE REVENUE CAPTUREAGREEMENT WITH eBay 11.$1 MILLION IS RECOGNIZED FOR FEDERAL HOUSING DOLLARS THAT WILL BE USED TO PURCHASE SURPLUS PROPERTY THAT WILL BE DEVELOPED FOR AFFORDABLE HOUSING IN THE FUTURE. IN THE WE HAVE A LITTLE BIT HERE. A LITTLE BIT OF REVENUE FOR PROPERTY RENTALS AND THEN WE HAVE THE REVENUE COMPONENT OF OUR PRE-FUNDING OF CITY REQUIREMENT CONTRIBUTIONS WHEREBY BECAUSE WE HAVE A DIFFERENT MARKET SITUATION, THE REPORT RETIREMENT BOARDS WHEN THEY REFINE THEIR POLICY TO DETERMINE WHETHER OR NOT THE CITY SHOULD BE ÃDETERMINE WHETHER WHAT TYPE OF DISCOUNT THE CITY WOULD RECEIVE IF IT PAID UPFRONT A LARGE OBLIGATIONS THAT WOULD BE PAID THROUGHOUT THE YEAR, THERE IS A DISCOUNT ASSOCIATED WITH THAT THE LEVEL OF DISCOUNT IS RELATED TO THE EXTENDED PERIOD OF TIME THAT THE MARKET IS IN A POSITIVE TERRITORY. FOR A NUMBER OF YEARS WE HAD DONE THE STRATEGY, WHICH SAVED US SOME FUNDS FOR BACK IN 1920 WE SUSPENDED THAT BECAUSE OF THE LEVEL OF DISCOUNT OFFERED BY THE RETIREMENT BOARDS WAS NOT GOING TO MAKE A SUBSTANTIAL DIFFERENCE FOR WHAT THE ADDITIONAL BORROWING COST IN THE INTEREST DURING REDUCTIONS WOULD OTHERWISE BE FOR US TO MAKE THE PREPAYMENTS. DOWN THE CONDITIONS ARE DIFFERENT, THE DISCOUNT FOR THE CITY IS HIGHER. WE WANT TO TAKE ADVANTAGE OF THE OPPORTUNITY WE WILL RECOMMEND REFUND TIER 1 RETIREMENT CONTRIBUTIONS AS PART OF OUR BUDGET STRATEGY WHAT THAT MEANS IS WE WILL USE SOME OF THE CASH WE CAN AND YOU SOME SHORT-TERM BORROWING TO MAKE THE PREPAYMENT AND THE SAVINGS ON THE RETIREMENT CONTRIBUTIONS FOR THE LESS INTEREST EARNINGS AND THE DEBT SERVICE WILL RESULT IN 7.5 MILLION DOLLARS SAVINGS FOR US YOU SEE THIS LINE FOR REDUCED CONJUGATIONS AND THAT IS WHAT THAT IS REFERRING TO. ON THE EXPENDITURE SIDE, WE HAVE A BUNCH OF DIFFERENT CATEGORIES THIS IS WHAT THE WHOLE BUDGET BOOK IS TALKING ABOUT. I WILL GET INTO THESE TOO MUCH. YOU SEE MEASURE E ALLOCATION FOR AFFORDABLE HOUSING. WE ARE RECOMMENDING TO SET ASIDE A LEVEL 11.1 MILLION DOLLARS FOR THE DEFICIT RESERVE. THAT WAS A DEFICIT WE ANTICIPATED WHEN

WE RELEASE THE FORECAST A COUPLE MONTHS AGO. THAT DEFICIT WAS SURELY GOING TO GET LARGER, BUT WE WANT TO SET ASIDE THE DOLLAR AMOUNT THAT WAS FORECAST IN THAT DOCUMENT AS A STARTING POINT TO MAKE SURE WE HAVE SOMETHING SET ASIDE FOR NEXT YEAR. WE HAVE A NUMBER OF LIMITED INVESTMENTS IN ONE-TIME SERVICES. WE HAVE SOME LIMITED INVESTMENT IN TECHNOLOGY AND INFRASTRUCTURE BACKLOG. JUST A FEW SERVICE-LEVEL ENHANCEMENTS VERY TARGETED. WE HAVE SET ASIDE A COUPLE RESERVES RECOMMENDED FOR THE ESSENTIAL SERVICES RESERVE FOR THAT TO BE AT THE LEVEL OF $1 MILLION RECOMMENDED AT A $3 MILLION LEVEL IN THE MAYOR’S MARCH BUDGET MESSAGE, BUT AS THE MESSAGE ITSELF POINTED OUT CONDITIONS WILL LIKELY CHANGE AND THEY HAVE. WE ARE RECOMMENDING THAT AT A LEVEL OF $1 MILLION, ALONG WITH $500,000 FOR A LITIGATION RESERVE FOR THE CITY ATTORNEYS OFFICEFOR POTENTIAL USE. AND WE HAVE OTHER ITEMS HERE. AND THEN A NUMBER OF COST REDUCTION SERVICE DELIVERY EFFICIENCIES , WHICH HELPS US BALANCE OUT THE BUDGET. BUT I DO WANT TO POINT OUT BEFORE I SUMMARIZE SOME OF THE OTHER PROPOSALS IS WE ARE ABLE TO MAKE REALLY GOOD EFFORTS TO HELP BALANCE THE BUDGET WITH PROPOSALS THAT DON’T HAVE A SIGNIFICANT IMPACT ON SERVICES. THESE ARE SOME OF THE STRATEGIES WE ARE ABLE TO USE TO MINIMIZE IMPACTED ORGANIZATION AND TO NOT HAVE LAYOFFS. I WILL HIGHLIGHT THESE HERE. ONE IS THE ANIMALS STATION OF THE REVENUE CAPTURE AGREEMENT FOR SALES TAX. WILL BE IMPORTANT ON IT. WE A PRE-FUNDING OF CITY REQUIREMEN WE HAD TO PAY DOWN DEBT AS DIRECTED IN THE MAYORS MESSAGE SO WE ARE GOING TO BE PAYING OFF. WHEN WE REFUND THE DEBT FOR CITY HALL, WE WILL GET SAVINGS FROM CITY HALL AND PAY OFF MOST LAGOS AND WE WILL PAY OFF THIS DEBT WHICH WILL GIVE A SAVINGS. PRETTY SIGNIFICANT COMPONENTS THERE. AND FUEL SAVINGS, BECAUSE THE PRICE FOR FUEL AND OIL HAS FALLEN, WE WILL MAKE SURE WE ARE CAPTURING THE SAVINGS APPROPRIATELY THESE ARE SOME OF THE OPTIONS WANTED TO HIGHLIGHT THEM HERE BECAUSE THEY MAKE A REALLY BIG CONTRIBUTION TOWARD OUR BUDGET BALANCING STRATEGY. AND JUST TO HIGHLIGHT A FEW BUDGET ACTIONS. I KNOW YOU WILL HAVE QUESTIONS ABOUT THESE OVER THE NEXT DAY AND 1/2 YEAR, BUT WE HAVE ÃWE HAVE A PROPOSAL FOR PUBLIC RECORDS REQUEST STAFFING ON A ONE-TIME BASIS TO MAKE SURE WE HAVE STAFFING TO HELP REQUESTS. WE HAVE ANOTHER INVESTMENT FOR UPGRADING THE COMPUTER AT A DISPATCH FOR POLICE. LUCAS JUST COMPRESSION DEVICES BUT WE ARE RECOMMENDING THE ILLUMINATION OF THE HEAD PROGRAM, BUT WE ARE RECOMMENDING THE SPECIAL VICTIMS UNIT STAFFING ADDING ONE POLICE LIEUTENANT FOR THE NEW SKU UNIT AND POLICE DEPARTMENT. AND SOME CIVILIANIZATION SAVINGS IN THE FIRE DEPARTMENT RELATED TO THE REORGANIZATION, AS WELL AS WE ARE RECOMMENDING THE ELIMINATION OF VACANCY POSITIONSIN THE POLICE DEPARTMENT. IN NEIGHBORHOOD SERVICES , A COUPLE KEY ONE-TIME ONGOING INVESTMENTS WE ARE ABLE TO FIT IN HERE. THE TRANSITIONAL JOB PROGRAMS, AND OTHER ONE-TIME INVESTMENT HERE THE PROJECT HOPE EXPANSION. WE HAVE SIX SITES ON THE ONGOING BASE BUDGET. LAST YEAR THERE WAS AN ADDITIONAL THREE FUNDED ON A ONE-TIME BASIS. WE DIDN’T GET TO THOSE THREE SITES THIS YEAR WE ARE RECOMMENDING TO HAVE THOSE FUNDED ON A ONE-TIME BASIS IN 2021. ALSO RECOMMENDING THE ONGOING STAFFING OF THE VIETNAMESE-AMERICAN CULTURAL CENTER. WE HAVE SPECIAL FUNDING FOR THE EDUCATION DATED DIGITAL LITERACY INITIATIVE ONE-TIME FUNDING FOR BEAUTIFY SJ GRANTS. WE ARE RECOMMENDING A REDUCTION LIBRARY COST, WHICH WILL RESULT IN FOUR HOURS PER WEEK FOR BRANCH LIBRARY HOURS AND WE TALK YEAR, WE HAVE SOME COST SAVINGS FOR THE COMMUNITY CENTER AND AQUATICS FAMILY CAMP IMPACTED BY COVID . WE ARE RECOMMENDING A REDUCTION OF 1.2 5 MILLION FOR WATERING OF PARKS, BUT WE THINK WE CAN ACCOMPLISH THIS WITHOUT HAVING ANY BROWNING OF TURF. JUST BEING DILIGENT ABOUT HOW THE WATER USE BE MANAGED AND MONITORED. AND THEN ALSO THE PLACE MAKING AN ACTIVATION RELATED AVIVA KIA IN VIEW OF PARKS WAS ON A ONE-TIME BASIS IN 2021. DUE TO THE RESTRICTIONS WE ARE GOING TO FACE, THAT IS RECOMMENDED BE PULLED OUT OF THE BUDGET HERE IF YOU ITEMS FOR CED. WE HAVE AFFORDABLE HOUSING TRANSACTION

STAFFING . IN OED WE HAVE MINOR INVESTMENT FOR BUSINESS OUTREACH POLICY DEVELOPMENT, RECOMMENDING PROGRAM TO CONTINUE ON A ONE-TIME BASIS ALSO, PROVIDE ONE-TIME FUNDING FOR THE LA PROGRAM. WE ARE GOING TO SEE SAVINGS FOR THE RAPID REHOUSING FUNDING SHIFT FROM MULTISOURCE ÃGENERAL FUND MULTISOURCE GENERAL FUND AND GIVE IT A BREAK FOR A COUPLE YEARS THERE. AND THEN WE ALSO DO HAVE STRATEGIES TO ADDRESS THE ANTICIPATED REVENUE SHORTFALL BECAUSE THE LOWER ACTIVITY ANTICIPATED IN THE PRIVATE DEVELOPMENT MARKET. WE NEED TO ADJUST COST ACCORDING THERE IN OUR FEE PROGRAMS. WE HAVE STAFFING REDUCTIONS AND USE OF RESERVES TO BALANCE THOSE. IN THE CSA WE HAVE A NUMBER OF ITEMS HERE FOR REGIONAL WASTEWATER FACILITY UPGRADE. MAINTENANCE FOR OUR COGENERATION ENGINE. A TRANSITION FOR BIOSOLIDS MANAGEMENT. WE HAVE ADDITIONAL STAFFING FOR A COMMUNITY ENERGY DEPARTMENTS AND WE ARE CONTINUING SOME ONE-TIME INAUDIBLE MAC FOR THE CLIMATE SMART SAN JOSE IMPLEMENTATION REVIEW TRYING TO BE STRATEGIC TO KEEP THAT GOING FORWARD TRANSPORTATION AVIATION WE HAVE A NUMBER OF PROPOSALS HERE MANY OF THESE ARE SPECIAL FUNDS RELATED , FOR EXAMPLE, WE HAVE A NUMBER SPECIAL ASSESSMENT DISTRICTS A NUMBER OF PROJECTS WILL MOVE FORWARD. CONTINUING ON A ONE-TIME BASIS AN ABATEMENT FUNDED BY THE PARKING FUND. AGAIN, LIMITED INVESTMENT HERE FOR THE BEAUTIFY ÃNOT BEAUTIFY BUT BEAUTIFY SAN JOSE LANDSCAPE MAINTENANCE PROGRAM . AT THE AIRPORT WE ARE ÃTHE AIRPORT HAS BEEN VERY PRUDENT TO CONSERVE COST AND ELIMINATE VACANT POSITIONS TO DEAL WITH THEIR CHALLENGES IN THE AIRLINE INDUSTRY AND LOWER LEVELS OF PASSENGER ACTIVITY. WE HAVE STAFFING REDUCTIONS FOR THE PASSENGER PROCESS TRANSPORTATION, BUSINESS DEVELOPMENT AND FISCAL ADMINISTRATION AND A LITTLE BIT A REDUCTION IN THE TRANSPORTATION DEPARTMENT RELATED TO STAFFING AND STREETLIGHT MAINTENANCE STAFF WE ALSO HAVE A FEW SERVICE IMPACTS HERE IN A FEW ADS LIKE I SAID, WE HAVE A LITTLE BIT MORE WE HAVE TO INVEST IN CAPITAL IMPROVEMENTS. WE HAVE 3.$5 MILLION IN TOTAL FOR CAPITAL INVESTMENT FUNDED BY THE GENERAL FUND. A BIG COMPONENT OR ELEVATOR MODERNIZATION OF THE POLICE BUILDING. WE ARE ADDING A COUPLE ENGINEERING STAFF ARE PUBLIC WORKS TO HELP WITH CIP STAFFING FUND. WE ARE CONTINUING THE SECOND YEAR THAT WAS AUTHORIZED LAST YEARS MERIT MARCH BUDGET MESSAGE FOR LEGAL ENFORCEMENT OF PROPERTIES. WE ARE ALLOCATING RECOMMENDING $100,000 TO CONTINUE THE WORK ON EDUCATION AND ANALYSIS FRAMEWORK. THERE ARE REDUCTIONS IN A NUMBER OF AREAS, INCLUDING OFFICES FOR THE MAYOR AND COUNCIL. WE HAVE REDUCTIONS IN ER FOR MANAGEMENT AND STAFFING AND REDUCTIONS IN CITY ATTORNEYS OFFICE AND HR RELATED TO A NUMBER OF ITEMS INCLUDING SERVICES STAFFING FOR CASHIERING STAFFING IN THE FINANCE DEPARTMENT AS WELL AS IN REDUCTION IN THE CITY CLERKS OFFICE. A NUMBER OF REDUCTIONS ALL TALKED ABOUT IN MUCH MORE DETAIL IN THE BUDGET DOCUMENT AND THEN I WOULD JUST STOP TALKINGIN A MOMENT WHEN I TALK THROUGH WHAT THE NEXT STEPS ARE , WHICH IS WE HAVE A COUPLE DAYS HERE OF BUDGET STUDY SESSIONS. WE HAVE COMMUNITY MEETINGS TO BE THE FIRST ONE WAS LAST NIGHT HOSTED BY THE MAYOR’S OFFICE. WE HAD TWO PUBLIC HEARINGS, ONE OF THE 21ST AND ONE ON THE 15TH THROUGH THE 15TH WILL INCLUDE THE HEARINGFOR THE MAYOR’S JUNE BUDGET MESSAGE, WHICH IS SCHEDULED FOR RELEASE ON THE 10TH . AND WE HAVE A COUNSEL REVIEW AND APPROVAL OF THE JUNE BUDGET MESSAGE ON THE 16TH AND ON JUNE 23 WE HOPE TO HAVE THE FINAL ADOPTION OF AN APPROPRIATION ACTIONS FOR ALL THE BUDGET. AND I WILL STOP THERE. AGAIN, A SINCERE THANK YOU TO MY LEADERSHIP TEAM AND TO THE BUDGET OFFICE WHO WORKED INCREDIBLY HARD TO TRY TO FIGURE THIS ALL OUT IN A SHORT AMOUNT OF TIME. I’M REALLY PROUD OF THE WORK WE DID AND I’M REALLY HAPPY TO WORK WITH THE DEPARTMENTS OUT THERE WHO HAD TO SPEND ON A DIME AND TO COME UP WITH ALL THESE WAYS TO SOLVE OUR BUDGETARY PROBLEM. I REALLY APPRECIATE THAT CONTINUED COLLABORATION AS WELL. AND SO WITH THAT I WILL PAUSE YOUR QUESTIONS >>Sam Liccardo : GREAT. THANK YOU SO MUCH, JIM. THANKS ALSO TO CHRIS AND KIM FOR YOUR PRESENTATIONS AS WELL. GOING

TO TRY TO MAKE SURE I GET THE SCREEN PULLED UP PROPERLY [LAUGHTER] WE WILL OPEN THIS UP NOW FOR SOME QUESTIONS. THIS IS JUST ON THE GENERAL ISSUES YOU HAVE RAISED. WE ARE OBVIOUSLY GOING TO BE GOING INTO GREATER DETAIL ABOUT THE SPECIFIC AREAS SHORTLY. IS THAT RIGHT, JIM? >> WE HAVE A SCHEDULE. WE HAVE COMMUNITY DEVELOPMENT NEXT. IF WE COULD FOCUS QUESTIONS BROADLY AND THEN WE CAN GET INTO THE SPECIFIC DEPARTMENTS AS WE STEP THROUGH LATER TODAY AND TOMORROW >>Sam Liccardo : GREAT. THESE ARE GENERAL QUESTIONS FOR NOW WILL GET INTO SPECIFIC DEPARTMENT SHORTLY COUNCILMEMBER DAVIS? >>Dev Davis : THANK YOU. THANK YOU ALL FOR YOUR PRESENTATION AS SOBERING AS IT IS. WE LIKE TO GO IN WITH OUR EYES WIDE OPEN. JIM, I HAVE A COUPLE QUESTIONS FOR YOU. LOST TRACK OF THE SLIDE COUNT. IT WAS ABOUT THE 19.7 MILLION WE ARE COVERING ON ONE-TIME FUNDS YOU SAID SOMETHING THAT WAS A LITTLE BIT DISTURBING. THIS ONE. SLIDE 14. THANK YOU WHICH IS WHATEVER OUR DEFICIT IS FOR NEXT YEAR, BASICALLY WE HAVE TO ALSO COVER THIS 19.7 MILLION AGAIN. SO KNOWING AND MARRYING THAT COMMENT WITH THE FACT YOU HAD ALSO SAID EARLIER IN THE PRESENTATION WE SEE IMPACTS FROM HER SESSIONS KIND OF COMPOUNDING OVERTIME FOR US BECAUSE OF THE RETIREMENT ISSUE AND HAVING TO HAVE LARGER RETIREMENT CONTRIBUTIONS AND THAT LAGS. WHY DID WE MAKE THAT CHOICE? OF HAVING THIS 19.7 MILLION, COVERING IT WITH ONE-TIME, KNOWING THERE IS THE POTENTIAL FOR NEXT YEAR. I HESITATE TO SAY IT BECAUSE I DON’T WANTED TO BE TRUE, BUT NEXT YEAR TO BE EVEN WORSE >> THAT IS A VERY PERTINENT QUESTION. IT COULD VERY WELL BE WORSE. THERE ARE A FEW REASONS WHY WE TOOK THIS APPROACH. ONE IS BECAUSE THERE ARE STILL SOME UNKNOWNS OUT THERE. THAT SAYS FORECASTING REALLY WITHOUT A NET AT ALL I’M COMING UP WITH NEW WAYS TO ESTIMATE THE REVENUE. A LOT OF UNCERTAINTY THERE ABOUT WHAT OUR SHORTFALL WILL ULTIMATELY BE. TO IS WE WANT TO ÃWE HAVE A COMPRESSED TIMEFRAME TO DO THIS IN AN A LOT OF AGENCIES ARE WAITING. WE’RE GOING TO WAIT AND COME BACK IN THE SUMMER AND FIGURE IT OUT THEN WE ARE ALREADY IN ORGANIZATION THATCAN’T WAIT SO WE HAVE TO TAKE ACTION NOW . WE KNOW WE NEED TO DO THAT NOW, BUT WE NEED TO BE MINDFUL WE JUST DON’T HAVE THE TIME IT WOULD TAKE, IN A NORMAL BUDGET YEAR OR WOULD HAVE THIS DEFICIT IDENTIFIED BACK IN DECEMBER, WE WOULD BE ABLE TO WORK THROUGH SEVERAL MONTHS AND BE THOUGHTFUL ABOUT WHICH ONGOING REDUCTIONS ARE WE GOING TO TAKE. WE KNOW WHEN WE HAVE TO BALANCE THE IMPACTS OF THE COMMUNITY TO GROW. WE WANT TO MAKE SURE WE TAKE A REASONABLE CHUNK HERE THAT WE CAN GET AT MINDFUL THAT ABSENT TIME, IT GETS DICIER THE MORE WE HAVE TO DIG INTO THE SERVICE IMPACTS THE OTHER THING IS WE HAVE THE BUDGET STABILIZATION RESERVE AND 33.2 MILLION. THAT WAS SET ASIDE FOR THINGS LIKE THIS TO HELP BRIDGE THROUGH. TO WHEN WE CAN’T GRAB IT ALL IN ONE YEAR, IT HELPS US STEP THROUGH THAT PROCESS TO GET US THROUGH UNTIL WE CAN ADDRESS IT ALL ON AN ONGOING BASIS >>DevDavis : THAT’S REALLY HELPFUL AND I APPRECIATE YOU ELABORATING ON THAT . I KNOW WE HAVEN’T TALKED ABOUT IT, BUT IS THERE ANY AMOUNT OF ONGOING DEFICIT BUT I GUESS IT WOULD BE ONE-TIME MONEY, THAT THE CARES MONEY THAT WE GOT WILL BACKFIL ? FOR EXAMPLE, WE HAVE PUBLIC SAFETY WORKING ON COVID RELATED CALLS. WE HAVE 100 PEOPLE WORKING ON FOOD DISTRIBUTION. HAVE WE BUDGETED FOR THEM IN THE GENERAL FUND? OR ARE WE BUDGETING FOR THEM SEPARATELY? >> THAT’S A REALLY GOOD QUESTION. THOSE EXPENSES ARE NOT PART OF THIS BUDGET AS PRESENTED HERE. WE ARE WORKING THROUGH THAT. WE ARE WORKING THROUGH ÃTHE CARES ACT HAS SOME GUIDANCE OUT THERE. IT HAS BEEN EVOLVING A LITTLE BIT

THERE ARE PROBABLY TWO THINGS WE ARE TRYING TO FOCUS ON. ONE IS THE NATURE OF WHAT THE CITY RESPONSE HAS BEEN AND WILL BE IS EVOLVING. TRYING TO NAIL DOWN WHAT THE COST IS IS A REALLY IMPORTANT COMPONENT OF IT. BEFORE WE KNOW THAT WHAT THAT IS GOING TO BECOME DON’T WANT TO BUDGET FOR THAT YET TWO, WE WANT TO BE VERY CAREFUL ABOUT OF THE ELIGIBLE COST FOR CARES ACT FUNDING IS. SOME OF THE GUIDANCE FOR CARES AND FEMA HAS BEEN SHIFTING SINCE IT WAS FIRST RELEASED. BEFORE WE MAKE A COMMITMENT, WE WANT TO MAKE SURE WE CAN KEEP THAT MONEY WHAT WE DON’T WANT TO DO IS RECOGNIZE A TON OF SAVINGS AND BE ABLE TO GIVE IT BACK ABSOLUTELY, AS WE GO THROUGH THE END OF THE FISCAL YEAR, WE ARE GOING TO BE EVALUATING THE WE ARE GOING TO BRING BACK RECOMMENDATIONS TO COUNSEL TO BUDGET FOR THOSE AND TO IDENTIFY THOSE COSTS WHICH SHOULD BE REIMBURSED OR OTHERWISE CATEGORIZED >>Dev Davis : THANK YOU. I REALLY APPRECIATE THAT. THAT MAKES SENSE IN THE CONTEXT OF ALSO DOING THIS CARRYOVER OF THE 19.7 MILLION. BECAUSE WE KNOW THE FUNDING SOURCES WILL SHIFT COMPARED TO WHAT WE SEE HERE IS WHAT I THINK YOU ARE SAYING >> RIGHT. TO REIMBURSE SOME OF THE CITIES COST, THERE WILL BE SOME OTHER ITEMS THAT WILL COME INTO PLAY. AGAIN, YOU WANT TO POINT OUT, WHAT EVER THE CARES ACT HELPS US WITH OUR ONE-TIME DOLLARS AND WE HAVE AN ONGOING PROBLEM. THAT WILL HELP US IN SOME LIMITED EXTENT, BUT WE ARE ALWAYS GOING TO BE THINKING AHEAD FOR THE NEXT FEW YEARS WHAT ARE WE GOING TO BE DOING ON AN ONGOING BASIS >>Dev Davis : JUST HELPS SOFTEN THE BLOW. IT DOESN’T PROTECT US FROM IT COMPLETELY. AND THEN THE OTHER QUESTION I HAD WAS ABOUT THE ÃI THINK IT IS ON THE NEXT SLIDE. HERE IT IS THE INTEREST EARNINGS ON THE PRE-FUNDING AND CITY RETIREMENT CONTRIBUTIONS, HE HAD THAT LISTED ON HIS AS AN ONGOING WHY IS THAT NOT LISTED AS A ONE TIME? >> PART OF OUR OVERALL LABOR COST THERE ARE RETIREMENT COSTS ARE ONGOING CONTRIBUTIONS. THE COSTS WE PAY ALL OUR STAFF IN THE RETIREMENT COMPONENTS OF THAT, THAT IS AN ONGOINGCOST ALL THIS WORKS FROM A PERSPECTIVE IS THAT THOSE ONGOING COSTS ARE GOING TO BE REDUCED BY 7 1/2 MILLION DOLLARS. WITH THE ACTUAL AMOUNT WILL BE WILL COME OUT NEXT YEAR BECAUSE NEXT YEAR THE RETIREMENTS ARE GOING TO SHIFT THE AMOUNT OF PRE-FUNDING WILL SHIFT . ALL THINGS BEING EQUAL, IT’S A 7 1/2 MILLION DOLLARSAVINGS , WHICH IS HOW WE THINK ABOUT OUR ONGOING EXPENDITURE. AND GUESS WHAT THIS ASSUMES ABSENT DIFFERENT DATA THAT THE RETIREMENT PRE-FUNDING CONTRIBUTION WOULD BE SOMETHING SIMILAR IN THE FOLLOWING YEAR >>Dev Davis : EVEN THOUGH WE KNOW THAT WE DIDN’T GET IT IN THE LAST YEAR AT ALL, RIGHT? BECAUSE WE WERE SOLATE IN AN EXPANSION. BUT WE HAD GOTTEN IT FOR MANY YEARS BEFORE THAT >> IT DID NOT PENCIL OUT . AND DID NOT PENCIL OUT, WHICH IS WHY WE DIDN’T ENGAGE IN IT IN 1920. WE WILL HAVE TO REEVALUATE THAT IN THE FOLLOWING YEAR, BUT FOR OUR PURPOSES OF WHAT WE THINK THE ONGOING LABOR COSTS ARE GOING TO BE, THOSE ASSUMPTIONS ARE CARRIED FORWARD ON AN ONGOING BASIS. IN ACTUALITY, THE ACTUARIAL VALUATION OF HOW WE ENDED THIS FISCAL YEARWILL SUBSTANTIALLY IMPACT WHAT THAT AMOUNT IS >>Dev Davis : RIGHT. OKAY. DO YOU THINK THAT BY THE TIME WE COME BACK ÃYOU DIDN’T TALK ABOUT THE CONTINGENCY PLAN FOR THE PHASE 2 OF GUTS, WHICH IS TOTALLY FINE. BUT WE HAVE BEEN TALKING ABOUT IT, IT WAS IN THE MESSAGE. BY THE TIME WE COME BACK FOR THAT IN AUGUST OR SEPTEMBER, WILL WE ALSO KNOW ABOUT HOW WE CAN UTILIZE BACKFILL, REIMBURSE OURSELVES OR WHATEVER WITH THE CARES ACT? WILL THAT SHIFT? WILL THAT BE SOMETHING WE CAN INCORPORATE INTO THE BUDGET AT THAT TIME? OR ARE WE ALWAYS GOING TO BE LOOKING BACKWARDS WITH THAT FUNDING? >> IT’S GOING TO BE A COMBINATION OF BOTH. AND DON’T WANT TO WAIT UNTIL AUGUST TO

HAVE THAT. WHAT OUR RESPONSE IS GOING TO BE IS EVOLVING, BUT THERE ARE COSTS WE WILL NEED TO PLAN FOR IN THE FUTURE. WE WANT TO IDENTIFY WHAT THOSE ARE BEFORE THE START OF THE YEAR BEGINS. WE HAD SOME OF THAT DISCUSSION ON TUESDAY ABOUT WHAT SOME OF THOSE BUCKETS ARE WE WANT TO HAVE THAT CULMINATION OF HERE’S WHAT WE THINK OUR FUTURE COSTS ARE IN HERE IS BASED ON WHAT WE THINK THE AMOUNT IS IN THEM BASED ON WHAT WE THINK MAY BE POTENTIALLY ELIGIBLE, HERE IS WHAT WE WANT TO REIMBURSE. I WOULD THINK WE WANT TO DO THAT BEFORE AUGUST, BUT THAT MAY OCCUR IN MULTIPLE BATCHES. IT MAY BE WE TAKE A CHUNK NOW FOR WHAT IS APPROPRIATE AND WE KEEP MONITORING IT. IN RESPONSE IS GOING TO INVOLVE AND FRANKLY, THE ELIGIBILITY CAN ALSO INVOLVE TOO. IT’S NOT UNCOMMON FOR GUIDANCE TO CHANGE AND FOR US TO BE IN A POSITION WHERE WE HAVE TO GET SOME MONEY BACK WE WILL CONSIDER BOTH THOSE THINGS AS WE MOVE FORWARD >>Dev Davis : THANK YOU. ONE LAST CLARIFYING QUESTION. SO WHEN THE GUIDANCE CHANGES, IT’S WHATEVER THE MOST RECENT GUIDANCE IS THAT APPLIES. IF YOU ARE GOING ALONG AND SPENDING BASED ON APRIL 25 GUIDANCE IN YOUR REIMBURSING AND THEY CHANGE IT ON MAY 5, WHATEVER YOU SPENT BASED ON APRIL 25 GUIDANCE, IF IT IS DIFFERENT FROM THE MAY 5, THOSE NO LONGER BECOME ELIGIBLE? AND THEN YOU ARE ON THE HOOK FOR THAT? >> I DON’T REALLY KNOW THAT WELL. ALL I WILL SAY AND I CAN ASK LEE TO JUMP IN IF HE KNOWS AND MAYBE RICK POTENTIALLY. AS THE GUIDANCE WEHAVE SEEN CHANGES THIS INVOLVES , WHAT I’M HOPING IS THE GUIDANCE OUT THERE DOESN’T REVERT BACK. I THINK IT WILL BE THE FURTHER CLARIFICATION AND REFINEMENT OF THE GUIDANCE. THE CARES ACT GUIDANCE WAS BROAD AND STARTING TO NARROW A LITTLE BIT AND SO WE WANT TO KEEP AN EYE AS THAT GETS MORE REFINED. I SEE DAVE >> YOU HAVE IT RIGHT, JIM. AND CERTAINLY THE WAY THE PROCESS HAS BEEN WORKING AND OTHERS NO MORE THAN I, BUT IT IS A REFINEMENT, IT IS A CLARIFICATION. IT’S NOT UNLIKE WHAT IS HAPPENED WITH THE PUBLIC HEALTH ORDERS THAT COME OUT AND THERE IS FAQ PROCESS AND OF THE PROCESS IT A REFINEMENT OF IN CLARIFICATION WITH THE ORDER IS. SAME THINGS HAPPENING WITH THE FUNDING SOURCES. I THINK JIM IS RIGHT I DON’T THINK WE WILL SEE ANY TYPE OF REVERSION OR ANYTHING LIKE THAT. BUT CLARIFICATION OWNS DOWN TO WHAT WE GET CONFIDENT FOR WHAT WE CAN REIMBURSE OURSELVES FOR >>Dev Davis : I KNOW I SAY THIS EVERY YEAR AT BUDGETING TIME, BUT IT CONTINUES TO BE TRUE. I REALLY APPRECIATE THE CAUTIOUS AND CONSERVATIVE AND CARETAKING APPROACH YOU ALL HAVE TO CRAFTING A BUDGET THAT WALKS A VERY FINE LINE IN THE BEST OF TIMES. AND REALLY MINIMIZING THE NUMBER OF SERVICE REDUCTIONS IN THE NUMBER OF PERSONNEL REDUCTIONS . VERY MUCH APPRECIATE THAT. I THINK HAVING THIS TWO-FACED APPROACH WHILE WE ARE WAITING FOR MORE CLARIFICATION AND MORE DATA, AND THINK IT MAKES A LOT OF SENSE. I HOPE THAT COME AUGUST WE WON’T HAVE TO TAKE THOSE EXTRA STEPS. I JUST REALLY APPRECIATE WE HAVE CONTINUED BEING CAUTIOUS SO THAT WE DON’T HAVE ANY OTHER TERRIBLE SURPRISES AT THE END OF THIS THANK YOU >> THANK YOU >>Sam Liccardo : COUNCILMEMBER ESPARZA? >>Maya Esparza : THANK YOU. I WAS HAVING SOME TECHNICAL CHALLENGES. I REALLY JUST HAD SOME QUESTIONS, I THINK COUNCILMEMBER DAVIS ADDRESSED THE FUTURE FEDERAL FUNDING AND ALLOCATION IN ROUND TWO. AND SO I GUESS GIVEN THE FACTS THAT THE HEROES ACT IS COMING UP, IT’S BY NO MEANS A CERTAINTY IN CONGRESS. BUT GIVEN THE TIMING OF THIS COMING BACK OR PHASE 2 COMING BACK AND AUGUST, IF CONGRESS IS ABLE TO PASS

SOMETHING WITH MULTIYEAR FUNDING, INCLUDING IN THE LATEST THERE’S A PROPOSAL TO INCLUDE EXPAND THE USE OF CARES ACT FUNDS TO COVER LOST, DELAYED OR DECREASED REVENUE STEMMING FROM THE COVID PUBLIC HEALTH EMERGENCY. IS THEIR TIME THEN TO INCORPORATE ADDITIONAL FEDERAL FUNDING BEFORE WE COME BACK IN AUGUST? >> THE HEROES ACT IS IN DEVELOPMENT. IF THAT WERE TO COME TO PASS OR SOME OTHER LEGISLATION WOULD COME TO PASS, THAT WOULD REIMBURSE THE CITY FOR LESS REVENUE. YOU WOULD CERTAINLY WANT TO USE THAT FUNDING AS MUCH AS WE COULD WHAT IS GOING TO HAPPEN AT THE END OF AUGUST IS WE ARE GOING TO GET OUR SALES TAX DATA FOR HOW 1920 ENDED. IN APRIL, MAY AND JUNE THAT IS WHEN WE FIND OUT HOW WE DID FOR SALES TAX THAT WILL BE ONE OF THE KEY DRIVERS FOR THE OTHER KEY DRIVER WE ARE GOING TO LOOK AT IS WORKING WITH FOLKS AND ECONOMISTS TO SEE HOW OUR REGION IS IN ECONOMY AS A WHOLE IS DOING IN JULY AND AUGUST ONLY REOPENING, DO WE HAVE MORE ACTIVITY OR LESS ACTIVITY AND SO THOSE FACTORS WOULD SAY OUR SHORTFALLS ARE WAY BIGGER THAN WE THOUGHT OR WE ARE DOING OKAY. AND SO AT THAT POINT WE WOULD THINK ABOUT COMING BACK TO COUNSEL AT THE END OF SEPTEMBER FOR THOSE CONTINGENCY PLANS, WHICH I APOLOGIZE FOR NOT PUTTING THE PRESENTATION HERE. IT WOULD BE ANOTHER 12 MILLION DOLLARS AND A LITTLE OVER 70 POSITIONS. I THINK IF WE HAD INFORMATION ABOUT REVENUE AND SUSTAINED REVENUE REIMBURSEMENT, WE WOULD LOOK AT THAT VERY CAREFULLY AND SEE HOW WELL THAT WOULD HELP US ALWAYS CONSIDERING WE HAVE AN ONGOING ISSUE TO DEAL WITH. I THINK IF WE HAD REVENUE TO OFFSET OUR SHORTFALLS, THAT WOULD BE VERY POSITIVE >>Maya Esparza : AND THE TURNAROUND TIME COULD INCORPORATE THAT. AGAIN, THIS IS BY NO MEANS DONE. IT’S A PROPOSAL AT THIS POINT. IT IS NOT REAL. BUT THE 2020 ALLOCATION FOR THE CITY OF SAN JOSE WOULD BE ALMOST 428 MILLION IN THE 2021 ALLOCATION WOULD BE ALMOST 214 MILLION FOR THE CITY OF SAN JOSE. I KNOW THIS IS BARRY COUNTY INTENSIVE, BUT WE WOULD HAVE THE BANDWIDTH TO INCORPORATE ALL THESE CHANGES IN TIME FOR WHEN WE COME BACK. IS THAT CORRECT? IS THAT WHAT I AM HEARING? >> IF WE NEW IN SUMMER WE WERE GOING TO GET $400 MILLION IN REVENUE, WHICH IS WHEN WILL WE GET IN SALES TAX CURRENTLY. I THINK WE WOULD PIVOT A LITTLE BIT, BUT DAVE WANTS TO JUMP IN >> I WANT TO REASSURE EVERYONE THAT IF WE ARE SEEING THOSE TYPES OF MONIES, IF THE CARES ACT COMES FORWARD, IT HAS THAT ABILITY FOR LOST REVENUE AND CERTAINLY IF IT WAS A MULTIYEAR APPROACH, WHICH WOULD BE WONDERFUL, WE ARE GOING TO WANT TO ACKNOWLEDGE THOSE THINGS ASAP IN OUR BUDGET PROCESS AND WE WON’T HESITATE TO COME TO YOU AND GET YOUR AUTHORIZATION TO ACKNOWLEDGE THE MONEY AND PROGRAM THOSE MONIES AND OFFSET ALL THESE IMPACTS. ABSOLUTELY >>Maya Esparza : GREAT. THANK YOU >>Sam Liccardo : COUNCILMEMBER FOLEY? >>Pam Foley : THANK YOU REALLY GOOD PRESENTATION, ALTHOUGH NOT AS POSITIVE AS WE HAD HOPED. BUT WE ALSO KNEW THAT WAS COMING. SO IT IS A REALITY CHECK OF WHERE WE ARE RIGHT NOW. SO MUCH UNCERTAINTY THAT EXISTS IN OUR LITTLE PERSONAL HOUSEHOLD ENVIRONMENT, BUT TO THE GREATER EXTENT THE CITY OF SAN JOSE AND THE COUNTRY AS WE ALL KNOW. ON ECHO COUNCILMEMBER DAVIS COMMENTS ABOUT APPRECIATING YOUR CONSERVATIVE APPROACH TO THE BUDGET AND LOOKING AT REFUNDING OF DEBT AS A WAY TO SAVE ONGOING EXPENSES. TO REFINANCE, TO PUT IT IN MY TERMINOLOGY , THE REFINANCE THAT OUTGO MONTHLY OR ANNUALLY IS A GREAT WAY WE CAN SPEND REFUNDING DOLLARS AND SAVE MONEY ON THE GENERAL FUND REFUNDING OR PREPAYING THE DEBT TO THE RETIREMENT FUNDS MAKES PRUDENT SINCE TOO. AND I APPRECIATE THAT. DAVE, I REALLY WANT TO APPRECIATE THAT YOU TRULY EMPHASIZE THAT WE ARE

AN ORGANIZATION POWERED BY PEOPLE. AND THAT YOU REACHED OUT TO OUR STAFF AND ASKED FOR THEIR INPUT AND MAYBE EVEN USED SOME OF THEIR INPUT IN HOW THE BUDGET WAS CRAFTED. AND I REALLY, TRULY APPRECIATE THAT THIS IS A STRESSFUL TIME FOR EVERYONE. WE ARE SHELTERING IN PLACE, WE DON’T KNOW WHAT THE WORLD IS GOING TO LOOK LIKE, OUR HEALTH IS POTENTIALLY AT RISK, OUR ECONOMIC CONDITION IS AT RISK, WE ALREADY KNOW THAT SO I APPRECIATE YOU ARE TRULY EMPHASIZING OUR STAFF. THAT IS REALLY IMPORTANT. EVEN THOUGH THERE ISN’T SOME UNCERTAINTY IN SOME OF THE EMPLOYEES THAT WILL NOT GET IN POSITION WHEN THE CUTBACKS ARE MADE, IT IS STILL IMPORTANT TO ENCOURAGE THE DISCUSSION WITH THEM AND TREAT THEM WITH RESPECT. I TRULY APPRECIATE THAT AND I’M GRATEFUL. I HAVE A LOT OF QUESTIONS ABOUT THE CSA OPERATING BUDGETS AND I WILL GET TO THAT LATER WHEN WE GET TO THE CSA. I REALLY JUST HAD ONE QUESTION. AND IT HAS TO DO WITH THE OPTIMISTIC, PESSIMISTIC CRAFT. I DON’T KNOW WHAT’S LIGHT IT IS. THERE YOU GO. THAT IS IT. BUT ON 22/23, YOU SHOW A RECESSION CASE OF WHERE OUR LOSS IS LESS THAN THE PRIOR YEAR. BUT THEN IT GOES BACK UP. TO WHAT DO YOU ATTRIBUTE THAT ANALYSIS? >> THE BIGGEST DIFFERENCE, WHAT IS HAPPENING IN 22/23 IS A PAYOFF OF A PORTION OF A SLICE OF THE UNFUNDED ACTUARIAL LIABILITY. THERE’S A SLICE THERE THAT GETS PAID DOWN, WHICH IS WHY WE HAVE THAT BUMP UP. WE HAVE BEEN TRACKING THAT. IT HAS BEEN CONSISTENT THROUGHOUT THE YEAR. IT’S A LITTLE BIT LESS OF A RETIREMENT COST, WHICH IS WHAT SHOWS UP THERE >>Pam Foley :IT’S NOT THAT YOU CONSIDER WE WILL BE OUT OF THE RECESSION BY THAT POINT . I WAS HOPING IT WAS JUST A CALCULATION ERROR. BUT IT’S MORE WE ARE PRE-FUNDING THE RETIREMENT FUND IN 21/22 AND THAT IS A BUMP UP IN A NUMBER AS OPPOSED TO IN 22/23 WE WON’T HAVE THE SAME ADDITIONAL EXPENSE >> THE ACTUARIAL ANALYSIS, THEY PLAN TO HAVE THIS PAID DOWN IN 22, 23. IT HAS BEEN PART OF A PLAN FOR HOW THEY CHUNK OUT THE DIFFERENT COMPONENTS OF THE RETIREMENT OBLIGATIONS. A SMALL SLICE OF THE GETS PAID OFF IN 22/23, WHICH IS WHY THE AMOUNT IS EITHER AS A SURPLUS IN THE BASE CASE AND A LITTLE BIT LESS OFA NEGATIVE AMOUNT IT DOESN’T HAVEANYTHING TO DO WITH PRE-FUNDING ITSELF . IS JUST THE ANTICIPATED PLANNED PAYMENTS TO RETIREMENT OVER TIME >>Sam Liccardo : CAN I JUMP IN FOR JUST A MOMENT? I WANT TO CLARIFY ONE POINT I THINK IS REALLY IMPORTANT THAT PEOPLE MAY BE MISLED ABOUT. TO NOBODY’S FAULT. THESE WERE THE NUMBERS THAT CAME OUT IN FEBRUARY, IS THAT RIGHT? >> YES >>Sam Liccardo : THIS RECESSION CASE WAS AN IMAGINARY RECESSION. HAVING NOTHING TO DO WITH REALITY WE KNOW TODAY WHAT WE KNOW TODAY IS, FOR EXAMPLE, THE RECESSION OF COURSE IS MUCH MORE IMMEDIATE AND MUCH STEEPER. IN THE 38.3 MILLION NUMBER IS AT LEAST ON THE CURRENT PROJECTIONS NORTH OF 70 MILLION IN THE HOLE AND THEY WILL GET WORSE. SO I DON’T WANT ANYONE THINKING THIS IS THE RECESSION PROJECTION TODAY >>Pam Foley : GOT IT. THANK YOU FOR THAT CLARIFICATION. I APPRECIATE THAT. WITH THAT, THAT’S THE ONLY QUESTION I HAVE >>Sam Liccardo : COUNCILMEMBER JIMENEZ? >>Sergio Jimenez: THANK YOU ONE QUESTION I HAVE IS ABOUT THE REFUNDING OF SOME OF THE DEBT TO AND THINK SPECIFICALLY WHAT WAS MENTIONED WAS AROUND REFUNDING OF THE DEBT FOR CITY HALL. I AM TRYING TO THINK BACK TO SOME OF THE SLIDES I’M TRYING TO THINK BACK TO WHAT THE AMOUNT OF SAVINGS WERE GOING TO BE ONCE WE REFUND THA >> THE AMOUNT OF SAVINGS Ã SORRY. THE AMOUNT OF ONGOING SAVINGS FOR ALL OF OUR DEBT SERVICE WOULD BE 4.2 MILLION DOLLARS. IS ABOUT $800,000 JUST FOR THE CITY HALL PORTION ITSELF. THAT IS THE GENERAL FUND SLICE. JUST IN THE GENERAL FUND IT’S ABOUT $800,000. ANOTHER 1.3 FRUITLESS LOGOS AND ABOUT $2 MILLION FOR STREETLIGHT. ALL

SAID AND DONE, IT’S ABOUT A $2 MILLION SAVINGS >>Sergio Jimenez: 4.2 MILLION I’M TRYING TO WRAP MY HEAD AROUND THIS. WE REFUND THAT MONEY, WE GET THAT SAVINGS, THAT WOULD NATURALLY FLOW IF WE DIDN’T APPLY IT TOWARD OTHER DEBT, THAT WOULD NATURALLY FLOW INTO THE GENERAL FUND? >> RIGHT. WHAT MAKES THE STRATEGY WORK IS A RESERVE THAT WAS SET ASIDE FOR THE PREVIOUS BOND EVERY JULIA CAN JUMP IN AT ANY TIME TO SLAP ME DOWN IF I AM WRONG. WE DID THE PREVIOUS ISSUANCE OF THE TAX-EXEMPT DEBT FOR CITY HALL. WE HAD TO SET ASIDE A RESERVE OF $26 MILLION THAT SAYS PAY, IN CASE THINGS GO BAD WE ARE GOING TO KEEP THIS RESERVE. BECAUSE OUR CREDIT RATING IS WELL-REGARDED, CREDITWORTHY INSTITUTION, WE CAN REFUND THOSE BONDS ON A TAXABLE BASIS, WHICH WILL RELEASE THE RESERVE WHICH WOULD COME TO THE GENERAL FUND. IT WOULD BE A GENERAL FUND REVENUE THAT EVEN THOUGH THERE WILL BE TAXABLE BONDS, WE WILL STILL HAVE SAVINGS FOR THAT FOR CITY HALL WE WOULD BE ABLE TO USE THE FUNDING FOR OTHER DEBT THE REASON WHY WE TOOK THAT APPROACH, NOT ONLY BECAUSE IT WASN’T THE BUDGET MESSAGE, IT’S CONSISTENT WITH HOW THE COUNCIL HASDIRECTED US . IT IS ACTUALLY A POLICY TO LEVERAGE THAT SAVINGS TO PAY DOWN OTHER DEBT. IT HELPS US WITH OUR GENERAL FUND SHORTFALL AND IT ISALSO ALIGNED WITH PREVIOUS COUNSEL POLICIES TO MAKE SURE ANY SAVINGS WE GET , WE USE THAT TO PAY DOWN OTHER DEBT THAT’S THE SAME APPROACH WE DID WHEN WE PAID OFF, WHEN WE SOLD HAYES. WE WERE ABLE TO TAKE THOSE AND PAY OFF RANCHO AND PAY DOWN MOST LOGOS. NOW FINALLY WE CAN PAY OFF MOST LOGOS AND EVEN THAT BEFORE THAT, I THINK IT WAS IN FOR YOU BUT YEARS BACK, WE DID A FIRE REFUNDING OF CITY HALL DEBT SERVICE. THAT HELP TO SPEED ON SOME OF THE DEBT ON HAYES, WHICH ALLOWED US TO SELL HAYES WE GOT THE WATERFALL EFFECTS OF USING THE SAVINGS FROM DEBT SERVICE TO PAY OFF OTHER DEBT SERVICE TO REDUCE OUR GENERAL FUND OBLIGATION. THIS IS FOLLOWING THAT SAME PATH >>Sergio Jimenez: I APPRECIATE THAT. IT IS CERTAINLY A WORTHWHILE APPROACH. I GUESS I AM JUST THINKING BACK TO A MEMO OR SOMETHING THAT COUNCILMEMBER ARENAS PUT OUT ÃMAYBE A FEW WEEKS AGO. THEY RELEASED IT OUT TO ME AND GOT ME THINKING ABOUT THIS APPROACH. I AM TRYING TO UNDERSTAND THE VALUE IN THIS. I AM ALL FOR PAYING OFF DEBT, SUPER IMPORTANT IN YOUR PRIVATE LIFE ASWELL AS CERTAINLY THE ROLE AS A CITY I CAN UNDERSTAND THE SAVINGS THAT COME FROM THAT, BUT I GUESS I AM JUST TRYING TO THINK OF THE VALUE OF DOING THAT AS OPPOSED TO THE VALUE THAT WE WERE GOING TO CONTINUE TO SEE A DOWNTURN. AGAIN, AND TRY TO WRAP MY HEAD AROUND THIS SEEING THE VALUE IN USING SOME OF THAT MONEY TO PLUG SOME OF THE OTHER HOLES THAT EXIST, RIGHT? AND SORT OF THE TRADE-OFF IS PAYING OFF DEBT AND CERTAINLY NOT HAVING THE CONTINUED OR LOWERING THE OBLIGATION TO THE GENERAL FUND AS IT COMPARES OR CONTRASTS TO MAYBE SETTING ASIDE SOME THE MONEY AND PAYING OFF SOME DEBT BUT NOT ALL THE DEBT. AND APPLYING IT TO FILLING SOME OF THE NEEDS THAT WE ARE IN DEEP NEED OF AT THE CITY AND VARIOUS DEPARTMENTS. I’M JUST TRYING TO SORT OF MAKE SENSE OF THAT >> THAT IS ABSOLUTELY A DECISION FOR THE COUNCIL TO MAKE. I WILL POINT OUT A COUPLE THINGS. IN ADDITION TO THE SAVINGS, ESPECIALLY WHEN YOU THINK MOST LOGOS, RIGHT NOW THE DEBT RELATED TO LOS LOGOS IS TAX-EXEMPT DEBT, WHICH MAKES THE OPERATION OF THE GOLF COURSE SUBJECT CERTAIN RESTRICTIONS THAT MAKE IT SORT OF A LITTLE BIT MORE CHALLENGING TO FIND AN OPERATOR. TO CHANGE THE OPERATION TYPES . TO MAKE MORE INCENTIVE-BASED. THERE IS A PORTION THERE. LIMITING THE DEBT GIVES THE CITY A LITTLE BIT MORE FREEDOM TO USE THAT FOR WHAT THE COUNCIL WISHES IN THE FUTURE. THE OTHER THING IS GOING BACK TO THE SLIDE HERE WE HAVE SOLVED Ã2021 WE SOLD ON AN ONGOING ÃRESOLVED THAT IN TOTAL. ON AN ONGOING, WE HAD ÃWE USE 19.$7 MILLION OF FUNDING HELP BALANCE. ONGOING WE STILL HAVE THE SHORTFALL TO THE EXTENT WE USED OTHER ONE-TIME MONEY LIKE THE SAVINGS

FROM THE CITY HALL DEBT SERVICE, THIS NUMBER BECOMES MORE NEGATIVE. IT DOES IN FACT WHAT THE FUTURE YEAR >>Sergio Jimenez: I UNDERSTAND OKAY. AND GIFFORD THAT. I THINK THAT HELPS ME BETTER UNDERSTAND IT. I SEE THE INHERENT VALUE IN THAT. JUST TRYING TO WRAP MY HEADAROUND THE POSSIBILITIES . I APPRECIATE THE RESPONSE. ONE OTHER QUESTION AND THE LAST QUESTION I HAVE IS RELATED TO THE FACT THAT A CONSISTENT THEME I AM HEARING WERE A SORT OF BUILT INTO EVERYTHING BEING SAID IS WE NEED MORE REVENUE, RIGHT? WE AS A CITY HAVE CONSISTENTLY TALKED ABOUT GETTING MORE REVENUE FROM DIFFERENT SECTORS OF THE ECONOMY, THIS OR THAT. TRYING TO BRING IN MORE REVENUE QUESTION I HAVE IS I KNOW THERE IS SOMETHING COMING BEFORE THE VOTERS IN NOVEMBER. THE CALIFORNIA TAX ON.[ INAUDIBLE ] IT WILL BE BEFORE THE VOTERS NOVEMBER 2020. I DON’T HAVE THE NUMBERS IN FRONT OF ME, BUT I THINK THE ESTIMATE IS THERE ARE POTENTIAL REVENUE SOURCES THAT ARE GOING TO COME IN AND MONEY THAT WILL COME INTO CITIES IF IN FACT THAT DOES PASS IN THE VOTERS TO APPROVE THAT. WE ACTIVELY THINKING ABOUT OTHER REVENUE SOURCES AND WHETHER THE CITY WOULD COME IN THE CITY OF MINISTRATION WOULD CONSIDER BRINGING THAT FORWARD TO THE CITY COUNCIL FOR AN UP OR DOWN VOTE AS TO WHETHER THAT IS SOMETHING WE WANT TO SUPPORT GIVEN IT COULD POTENTIALLY PROVIDE ADDITIONAL REVENUE TO THE CITY? >> MAYBE I WILL ASK TO SEE IF DAVE ORLY WE WANT TO CHIME IN ON THE STATUS >> I WILL SEE IF LEE IS THERE BUT CERTAINLY, COUNCILMEMBER, YOU BRING UP WHAT WE HAVE BEEN TALKING ABOUT. AND THAT IS THE FACT OUR JOBS TO HOUSING AND BALANCE, PRIMARILY, IS A MAJOR CONTRIBUTOR TO OUR CHRONIC FISCAL MARGIN. REVENUE SOURCES ARE IMPORTANT IN SEEKING THOSE REVENUE SOURCES ARE IMPORTANT FOR US. I THINK FUNDAMENTALLY ADDRESSING THAT AND BALANCE WOULD BE THE BEST PROTECTION MOVING FORWARD. BUT CERTAINLY NOT RULING OUT OTHER MEASURES WE WOULD WANT TO TAKE. I DON’T THINK WE ARE CONTEMPLATING AT THIS POINT BRINGING FORWARD ANY SPECIFIC MEASURE, BUT I WILL ASK WE TO GIVE YOU MORE CONTEXT THERE >> AS DAVE MENTIONED, THE UNDERLYING AND BALANCE WOULD BE KIND OF THEFUNDAMENTAL APPROACH WE WOULD TAKE TO THE ANALYSIS OF THAT BALLOT MEASURE . GIVEN 100 PERCENT OF THE TEAM HAS BEEN FOCUSED ON THE RECOVERY PROCESS FOR COVID-19 AND IS COUNCILMEMBER ESPARZA MENTIONED, THE FIGHT WITH CONGRESS. AT THIS TIME UNLESS OTHERWISE DIRECTED, IT IS NOT OUR ÃWE DON’T ANTICIPATE BRINGING A LOT OF DIFFERENT BALLOT ITEMS, WHETHER THEY ARE AT A STATE OR FEDERAL LEVEL, TO COUNSEL FOR ANY TYPE OF POSITIONS AT THIS POINT >> I THINK WE HAVE SOME TIME IT COMES BEFORE US IN NOVEMBER I THINK IT WOULD BE WORTHWHILE TO LOOK AT EVERYTHING. A MULTIFACETED APPROACH OF LOOKING AT DIFFERENT REVENUE, WHETHER IT IS A BALLOT MEASURE, WHETHER IT IS REFUNDING OF BONDS OR WHATEVER IT MAY BE. I THINK IT WOULD BE WORTHWHILE TO THOSE FOLKS WHO SIT ON RULES AND CERTAINLY US TO SUBMIT SOMETHING TO RULES. IT WOULD BE A WORTHWHILE EFFORT FOR US TO HAVE A LITTLE BIT OF DEDICATED STAFF TIME TO LOOK AT THAT. MAYBE NOT NOW. BUT MAY BE FURTHER DOWN THE LINE. I THINK THE SUPPORT OF THE CITY IS A SIGNATORY THAT SOMEONE IS BEING IN SUPPORT OF THE MEASURE OR INITIATIVE I THINK WOULD BE REALLY IMPORTANT. I THINK IT HAS THE POTENTIAL TO BRING THE REVENUE WE SO DESPERATELY NEED ANYWAY. THANK YOU FOR THAT >>Sam Liccardo : COUNCILMEMBER DIEP? >>Lan Diep : I WILL GO OFF WHAT COUNCILMEMBER JIMENEZ WAS IN I KNOW NOTHING ABOUT THE BALLOT MEASURE HE WAS TALKING ABOUT, BUT BASED ON THE NAME I WOULD SUSPECT ANY TAX REVENUE WOULD GO TO SCHOOL DISTRICTS IF IT IS FOR EDUCATION. THAT’S JUST MY THOUGHT. MY QUESTION IS VERY HIGH-LEVEL, ARE WE DONE TAKING PART IN ANY FUTURE MARKETS? I DON’T KNOW IF AS A CITY ÃSIX MONTHS FROM NOW WE ARE GOING TO NEED APPLES AND APPLE FARMERS WANT TO KNOW IF SIX MONTHS FROM NOW THEY CAN SELL APPLES. WE HAVE A NEED TO PURCHASE GLOVES OR SAFETY EQUIPMENT OR TAPE OR

TONER OR ANYTHING LIKE THAT, KNOWING IN THE FUTURE MIGHT BE DIFFERENT? WE CAN SAVE MONEY BY 1000 ORDERS OF WHATEVER IT IS RIGHT NOW AND LOGIN A CHEAP PRICE? WHAT I DON’T THINK THEY HAVE ANYTHING THAT PARTICULARLY CONTEMPLATED. I KNOW AS PART OF OUR EMERGENCY RESPONSE IN EOC WE ARE LOOKING AT THE TYPES AND AMOUNTS, THE BURN RATE FOR PDE IN GENERAL. WE DON’T HAVE A SPECIFIC STRATEGY HERE TO PROVIDE PRODUCTS. I THINK WHAT MAY BE A LITTLE BIT OF A SILVER LINING IS ALTHOUGH IT TAKES A LITTLE BIT OF TIME, IT MAY BE SOME OF THE CONSTRUCTION COSTS FOR FUTURE CAPITAL PROJECTS, WE MAY BE ABLE TO GET MORE VALUE OUT OF THAT. AND ON THE LAST RECESSION, THEDOLLARS WE WERE ABLE TO STRETCH WILL BE FAR FOR THE LAST BIG RENOVATION THERE MAY BE BENEFITS THERE THAT WE MAY BE ABLE TO TAKE ADVANTAGE OF >>Lan Diep : THAT WAS ALL. I WAS CURIOUS IF WE HAD NEED FOR SUCH THINGS. THANK YOU >>Sam Liccardo : COUNCILMEMBER KHAMIS? >>Johnny Khamis : >>Sam Liccardo : YOU MIGHT BE ON MUTE >>Johnny Khamis: SORRY ABOUT THAT. I WANTED TO ALSO THANK STAFF FOR THE IN-DEPTH STRATEGIES HERE. I WILL HAVE SOME QUESTIONS LATER, BUT ON THE LINES OF LOOKING FOR NEW REVENUE SOURCES, I KNOW OUR GAMBLING CASINOS ARE SHUTTERED RIGHT NOW. AND WE MAKE DUTCH HOW MANY MILLIONS TO BE USUALLY MAKE FROM THE CARD ROOMS? >> LET ME CHECKON THAT AND GET BACK TO YOU BEFORE THE SESSION IS OVER >>Johnny Khamis: I KIND OF REMEMBER STUFF FROM A WHILE BACK IT WAS LIKE $20 MILLION A YEAR IN GENERAL FUND REVENUES COMING IN. AND THAT IS ON TOP OF WHAT THEY PAY FOR THEIR OWN SERVICES >> OUR TAX REVENUE AND HEARING IS ABOUT 17 MILLION >>Johnny Khamis: OKAY. I WAS CLOSE. I KNOW WE WERE TALKING AND I KNOW THEY WANTED TO EXPAND THE NUMBER OF TABLES COULD BE LOOK AT THAT? I KNOW WE ARE NOT TALKING A WHOLE LOT ABOUT MEASURES, BUT THIS SEEMS LIKE A GOOD WAY ÃI DON’T THINK THE TAX SERGIO WAS MENTIONING, I DON’T THINK IT’S GOING TO PASS. BUT THIS ONE MIGHT ESPECIALLY IF THE CITY COUNCIL SUPPORTS IT. I’M HOPING THE STAFF BRINGS IT BACK FOR US TO DISCUSS BECAUSE WE HAVE BEEN DISCUSSING THIS OFTEN ON FOR A WHILE. I’M HOPING IT COMES FORWARD AGAIN BEFORE THE ELECTION CYCLE. REMEMBER IT WAS GOING TO INCREASE POTENTIAL REVENUES ALONE. THIS MIGHT BE A WORTHWHILE EFFORT FOR OUR STAFF >> THANKS, COUNCILMEMBER. I THINK WE ARE PLANNING ON COMING BACK AND RECONNECTING ON THAT I DO BELIEVE THE CARD ROOMS ARE EXPERIENCING PRETTY SIGNIFICANT IMPACTS RIGHT NOW. AND SO WE WILL HAVE TO FIGURE OUT WHAT THAT DOES TO THEM IN THEIR VIABILITY MOVING FORWARD. BUT I DO THINK WE WILL NEED TO LOOP BACK WITH YOU ON THAT SUBJECT THE WHOLE COUNSEL >>Johnny Khamis: I WOULD APPRECIATE THAT. IS ONE POTENTIAL REVENUE SOURCE THAT WON’T AFFECT EVERYBODY AND COULD HELP ON OUR BIGGEST TAX REVENUE GENERATORS. AGAIN, I REALLY APPRECIATE EVERYONE’S TIME AND EFFORT ON THIS. THANK YOU >>Sam Liccardo : COUNCILMEMBER ARENAS? >>Chappie Jones: MY QUESTION Ã FIRST OF ALL, I WANTED TO THANK ALL STAFF. I CAN IMAGINE DOING THE WORK YOU ARE DOING IN THE EOC AND ALSO TAKING CARE OF OUR BUDGET. DURING THESE VERY TERRIBLE TIMES. THANK YOU FOR ALL THE SLEEPLESS NIGHTS YOU HAVE HAD. IF YOU DIDN’T ALREADY HAVE SLEEPLESS NIGHTS SO THANK YOU SO MUCH FOR THE WORK YOU ARE DOING. FIRST I WANT TO START OFF BY SAYING THAT. I ALSO WANTED TO FOLLOW UP ON A COMMENT COUNCILMEMBER JIMENEZ, YOU MADE. I KNOW IT WAS A COMMENT I HAD MADE SOME WEEKS AGO ON IT DOESN’T MAKE SENSE TO PAY OFF OUR DEBT NOW I ALWAYS LIKE TO LOOK AT THE TYPICAL FAMILY AND WHAT THEY

ARE DOING AT THIS POINT. LIKE IN WHATEVER SITUATION IS, ALTHOUGH WE ARE QUITE DIFFERENT IN TERMS OF BUREAUCRACY, BUT I HAVE ALWAYS SAID IN DIFFICULT TIMES WE TEND TO SAVE MORE AND JUST LIKE A FAMILY DOES, THEY ARE PROBABLY MAKING MINIMUM PAYMENTS ON THEIR OBLIGATIONS. MAYBE THEY ARE NOT MAKING ANY PAYMENTS ON THEIR OBLIGATIONS BECAUSE IT JUST ISN’T FEASIBLE. BUT DURING THESE DIFFICULT TIMES, THAT IS PROBABLY WHAT I’M ASSUMING THEY ARE DOING. SO MY QUESTION WAS ÃIS, HOW MANY YEARS DO YOU THINK IT WILL TAKE BEFORE WE PAY DOWN THIS DEBT THAT IT BECOMES A POSITIVE? >> YOU MEAN WHAT THE PAYOFF WOULD BE FOR THE ONE TIME PAY DOWN? WE HAVE TO LOOK AT THAT AND GET THAT BACK LATER DURING THE SESSION HERE, OF WHAT THE INTEREST SAVINGS WOULD OTHERWISE BE. WE CAN DEFINITELY LOOK AT THAT. THIS IS ONE OF THE FEW STRATEGIES WE HAVE THAT ARE ABLE TO REDUCE OUR COST WITH PRODUCTION SERVICES. BUT WE CAN HAVE THAT ANSWER LATER ON IN THE SESSION >>Sylvia Arenas : I CERTAINLY APPRECIATE IT RELEASES MONEY FOR OUR GENERAL FUND AND I APPRECIATE THAT. I WANT THAT AS WELL IN THE LONG TERM. I KNOW IT IS HARD TO SEE OURSELVES OUT OF THIS SITUATION AT THIS POINT BECAUSE IT IS JUST SO GLOOMY. BUT I KNOW WE HAVE BEEN ONE OF THE FIFTH LARGEST ECONOMIES IN TERMS OF CALIFORNIA AND SAN JOSE IS A HUGE PLAYER IN THAT. I HEARD LOUD AND CLEAR THAT IT SOUNDS LIKE GOOGLE IS STILL COMMITTED TO SAN JOSE. AND SO THAT IS FOR ME THE COMMITMENT AND AN INVESTMENT IN OUR COMMUNITY TO POSSIBLY GROW IN THE NEXT COUPLE YEARS HOPEFULLY. WE WILL SEE THERE IS AN OPPORTUNITY FOR CONSTRUCTION AND AVAILABILITY OF EMPLOYEES AT THIS POINT TO MAKE THAT HAPPEN. AND SO AM THINKING ABOUT THE SAVINGS WE WILL NEED IN OUR GREAT YEARS VERSUS IMMEDIATE YEARS. I THINK AS WE MOVE FORWARD AND HOPEFULLY SEE ÃAND BEING VERY OPTIMISTIC, BUT IN THE YEARS TO COME MAYBE IN FOUR YEARS CERTAIN TIME PERIOD, I DON’T KNOW WHEN WE WOULD NORMALLY CHANGE OUR STRATEGY, WE DO THAT EVERY YEAR AS WE ARE REVISITING THE BUDGET, BUT IF WE SEE THERE IS POSSIBLY A NET POSITIVE IN OUR FUTURE YEARS, STRATEGY AND PAYING OFF DEBT CHANGES A BIT SO WE CAN HAVE MORE FUNDING FOR SOME OF THE RESOURCES, SOME OF THE PROGRAMMING THAT WILL HELP SUPPORT OUR COMMUNITY. I THOUGHT MY HOUSEHOLD WAS LIVELY. AND I HAVE MY FIVE-YEAR-OLD IN MY KITCHEN I’M JUST THINKING MY BASIC QUESTION IS WHEN WILL WE CHANGE THIS STRATEGY AS WE SEE THERE IS MAY BE SOME SURPLUS IN THE NEXT FOUR YEARS. DOES IT MAKE MORE SENSE TO CHANGE TO MINIMUM PAYMENTS AS WE GET INTO A BETTER STANDING? >> I THINK WE WANT TO TRY TO ALIGN WITH THE COUNCIL POLICY AND LEVERAGE THAT SAVINGS TO PAY OTHER DEBT. ONE OF THE REASONS WHY IS IT DOES PROTECT US. AND ALSO, IT’S A POSITIVE VIEW FROM THE AGENCY. SAN JOSE IS KNOWN AS A FISCALLY SET CITY. SO TAKING THESE HOAXES FOR FUTURE INVESTMENTS WE MIGHT MAKE FOR OTHER OBLIGATION BONDS OR ANY OTHER BORROWING THAT WOULD BENEFIT THE DIRECT PUBLIC. THE STEPS HERE ARE IMPORTANT FOR AGENCIES WHICH TRANSLATE TO LOWER DEBT IN THE FUTURE FOR FUTURE ISSUANCES THE OTHER THING I WILL MENTION IS I’M NOT SURE WHEN WE ARE GOING TO. THAT MAY BE A LITTLE

WHILE HERE. IF WE HAVE THIS POTENTIAL TO REDUCE ONGOING AMOUNTS WE ARE ABLE ÃWANT TO KEEP IN MIND THIS 19.$7 MILLION NEGATIVE HERE. TO THE EXTENT WE USE MORE ON ONE-TIME FUNDING TO SOLVE OUR SHORTFALL, IT KICKS THE CAN DOWN THE ROAD A LITTLE BIT. WE WANT TO BE MINDFUL OF THAT >> RIGHT. BUT I HEARD ALSO THE CARES MONEY, WE ARE NOT TAKING THAT INTO ACCOUNT INTO ANYTHING IN TERMS OF BALANCING OUR BUDGET HERE OR PART OF OUR STRATEGY BECAUSE THINGS ARE JUST CHANGING AND WE ARE NOT AT THE POINT WHERE WE ARE RECEIVING ANY REIMBURSEMENTS JUST YET. SO THERE IS STILL AN OPPORTUNITY FOR US TO HAVE MAYBE SOME OF THIS 19 MILLION WE ARE GOING ON EVERY YEAR IN TERMS OF A DEFICIT TO SLIGHTLY CHANGE WITH THAT. CORRECT? >> TO THE EXTENT THE CARES ACT WAS ABLE TO REIMBURSE THE COST, THAT WOULD BE HELPFUL FOR SURE THE OTHER THING TO NOTE IS THIS 19.$7 MILLION COULD BE USED WITH MAYBE THERE ARE OTHER SOURCES THAT WILL HELP REIMBURSE THE CITY FOR SOME COSTS. IT IS ALSO VERY POSSIBLE THE ONE THAT $6 MILLION BECOMES MORE NEGATIVE WE ARE IN A SITUATION WHERE WE DON’T HAVE A LOTTO GET INFORMATION. WE DID OUR BEST TO COME UP WITH AN ESTIMATE, IT WOULD BE THE CASE THIS ESTIMATE IS TOO LOW. AND OUR REVENUES COME IN WORSE. THAT’S THE OTHER THING WE WILL BE KEEPING IN MIND AS WELL >> I JUST HAD ONE MORE QUESTION ABOUT THE SAN JOSE CAMP. I CAN’T REMEMBER WHAT SLIDE THAT WAS ON. HAD A QUESTION ABOUT WHAT THAT ACTUALLY MEANS. ARE WE CLOSING IT BECAUSE OF THE Ã OBVIOUSLY WE ARE CLOSING IT BECAUSE OF COVID , BUT IS IT JUST FOR THE UPCOMING YEAR? IS THAT FOR JUST THIS SUMMER COMING UP AND IS IT BECAUSE WE NEED TO REDUCE STAFFING OR IS IT BECAUSE OF THE POTENTIAL OF HAVING PEOPLE TOO CLOSE TOGETHER AND SAN JOSE CAMP, ALTHOUGH FROM WHAT I REMEMBER GOING THERE, MOST CABINS ARE PRETTY STRETCHED FAR AWAY FROM EACH OTHER >> THIS IS A ONE-TIME REDUCTION OF SAVINGS. ALL THINGS BEATEN EQUAL AT FAMILY CAMP WOULD RESUME THE FOLLOWING YEAR SAME WITH THE AQUATICS PROGRAM AND THE COMMUNITY CENTER. WE ANTICIPATE NOT BEING ABLE TO OPERATE OUR SUMMER PROGRAMMING INCLUDING FAMILY CAMP BECAUSE OF THE SOCIAL DISTANCING THAT WOULD LIKELY BE IN PLACE EVEN THOUGH THERE MAY BE UNIQUE CIRCUMSTANCES AND A COUPLE AREAS, WHERE STAFF IS COMING FROM IS A ONE OPERATE THAT SAFELY THERE AND THESE SUMMER MONTHS >>Sylvia Arenas : HOW ABOUT THE PLACE MAKING AN ACTIVATION ELIMINATION. IS THAT BASED ON THE SAME REASONING? >> CORRECT. THE LARGE MASS GATHERINGS WILL PROBABLY BE SOME OF THE LAST THINGS THAT WILL COME OFF THE SHELTER IN PLACE RESTRICTIONS HERE THAT WAS ALSO THE THOUGHT PROCESS FOR THE BUDGET REDUCTION ACTIO >>Sylvia Arenas : I KNOW IN CITIES LIKE LA AND OAKLAND, THERE ARE SOME CLOSED STREETS HAPPENING AT THIS POINT. AND TO ENCOURAGE ONE FOR PEOPLE TO COME OUT AND BE OUTDOORS IN A SOCIALLY DISTANT MANNER SO WE ARE NOT SHARING SIDEWALKS EVEN IN MY NEIGHBORHOODS WHERE I HAVE ONE OF THE DISTRICTS, ONE OF THE LARGEST IN TERMS OF SIZE. BECAUSE WE HAVE A LOT OF OPEN SPACE. BUT EVEN NOWADAYS, I TAKE WALKS IN THE EVENING TO AVOID OTHER PEOPLE AND THEY ARE CATCHING ON TO MY STRATEGY, WHICH IS NOT UNIQUE TO ANY THINKING. I FIND MYSELF COMING ÃWITH MY KIDS GOING ON TO THE STREET TO AVOID PEOPLE WHO ARE ON THE SIDEWALK BECAUSE OF COURSE IWANT TO MAINTAIN AS MUCH DISTANCE AS I CAN . AND SO WE CAN TALK ABOUT THIS LATER, I JUST THINK ÃI DON’T

WANT TO HAVE US THROW THE BABY OUT WITH THE BATHWATER. I THINK SOME OF THE PLACE MAKING ACTIVATION CAN HELP US MANAGE PEOPLE IN THE OUTDOORS ESPECIALLY ONCE THE ORDER IS LIFTED AND PEOPLE ARE JUST GOING TO SWARM OUTSIDE. THAT MAKES ME REALLY NERVOUS. AND I THINK IT IS OUR RESPONSIBILITY TO MANAGE PEOPLE ON THE OUTSIDE. JUST SO WE CAN CONTINUE TO BE SAFE AND CONTINUE TO FLATTEN THAT CURVE I DON’T KNOW THAT WE ARE GOING TO SEE PLACE MAKING ACTIVATION IN THE SAME WAY WE HAVE SEEN IT IN THE PAST WHERE WE WANT TO HAVE A LARGE NUMBER OF PEOPLE IN THE SAME PLACE. BUT REALLY TO AVOID THE VERY GOAL WE HAD IN THE PAST. THAT IS TO MANAGE PEOPLE ONCE THEY START USING MORE OF OUR PARKS. AND STREETS AND THINGS OF THAT SORT. AS WE ARE ALL SEEN, THERE ARE PROTESTS ACROSS OUR NATION BECAUSE STAYING INSIDE FOR EIGHT WEEKS IS A LITTLE MUCH FOR FOLKS FOR EVEN IN SAN JOSE I HAVE BEEN DISAPPOINTED IN SOME OF OUR ÃI THINK LAST WEEK AND ON CINCO DE MAYO AS EIGHT PEOPLE WERE CONGREGATING DESPITE TAKING THAT RISK RISKING OTHERS, WHICH IS THE BIGGEST SHAME HERE IS RISKING OTHER PEOPLE AS THEY CONGREGATE. I THINK IT IS REALLY OUR OBLIGATION TO MANAGE THAT. I KNOW WE CAN HAVE THIS CONVERSATION FURTHER, BUT I WANTED TO KNOW THE LOGIC FOR THE PLACE MAKING AN ACTIVATION ELIMINATION. IF WE THINK OF A TRADITIONAL SENSE OF WANTING TO HAVE PEOPLE CONGREGATE IN ONE PLACE I WOULD ABSOLUTELY BE SUPPORTIVE OF ELIMINATING THAT BUT BECAUSE THINGS HAVE CHANGED AND WE KNOW WE NEED TO MANAGE PEOPLES ENGAGEMENT IN THE OUTDOORS, I THINK WE NEED TO TAKE A LOOK AT THIS IN A DIFFERENT WAY WITH A NEW SITUATION WE HAVE HERE IN SAN JOSE THAT WE WILL HAVE FOR MANY MONTHS TO COME IN THE NICE WEATHER THAT UNFORTUNATELY WE ALL ENJOY >>Sam Liccardo : THANK YOU COUNCILMEMBER PERALEZ? >>Raul Peralez : >>Sam Liccardo : IF I COULD ASK EVERYONE WHO HAS RAISED YOUR HAND IF YOU COULD LOWER YOUR HAND IF YOU HAVESPOKEN ALREADY >>Raul Peralez : MY QUESTIONS WERE AROUND THE SAME IN REGARDS TO ÃSORRY, THE SAME AS COUNCILMEMBER KHAMIS IN REGARDS TO REVENUE OPPORTUNITY I AMCURIOUS WHAT OTHER THOUGHTS WE HAVE AT THE MOMENT , BE IT COMING BACK TO TALK ABOUT THE CARD ROOMS OR POTENTIAL REVENUE GENERATING OPPORTUNITIES AND THEN I’M CURIOUS WHEN WE MIGHT BE ABLE TOHAVE SOME OF THOSE CONVERSATIONS . THAT IS NOT NECESSARILY PART OF THIS PRESENTATION >> WE ALWAYS ARE TRYING TO IDENTIFY A FEW DIFFERENT REVENUE COMPONENTS. WE HAVE SMALLER ONES WE ARE ABLE TO DO WITH THE STAFF LEVEL. THE MERCHANT CARD TRANSACTION FEES, WHICH WE ARE RECOMMENDING TO START ON JANUARY ONE OF NEXT YEAR FOR A SMALL SERVICE CHARG THOSE ARE LIMITED INSTANCES TO MAKE NOT JUST HERE IN THEIR TO JUMP UP REVENUE LEVELS, BUT IF WE WANTS TO EXPAND ANYMORE ABOUT THE POTENTIAL REVENUE MEASURES >> MAYBE I WILL JUMP IN. I GUESS WE WILL NEED TO THINK THROUGH HOW WE LOOPBACK AND ENGAGE THE COUNCIL ON THAT DISCUSSION. WHERE WE ARE AT RIGHT NOW, THE PROPOSED BUDGET DOES NOT ANTICIPATE ANYTHING ALONG ADDITIONAL REVENUE MEASURES, BUT I DO UNDERSTAND THE PERSPECTIVE OF THE COUNCIL WANTING TO MAKE SURE YOU ALL HAVE THE OPPORTUNITY TO CONSIDER THINGS. AT A POINT WHERE IT IS NOT TOO LATE. AND SO WE NEED TO THINK THROUGH THAT TO FIGURE OUT HOW WE CAN ENGAGE YOU ON THAT MAKING SURE WE ARE NOT SERVING YOUR DECISION-MAKING ABILITY ON WHAT

TO MOVE FORWARD. WE WILL NEED TO HUDDLE AND LOOPBACK WITH YOU ALL ON THAT ASPECT >> THIS IS RICK. I WANT TO ADD SPECIFICALLY WITH REFERENCE TO THE CARD ROOMS, WE WERE ENGAGED IN LENGTHY SETTLEMENT DISCUSSIONS FOR MONTHS. WE KEPT THE COUNCIL APPRISED IN CLOSED SESSION. THEY JUSTSORT OF STOPPED . NOT IN OUR INSTANCE, BUT JUST SORT OF STOPPED AND THEY WERE PURSUING OTHER ISSUES. THERE HAS BEEN SOME INDICATION THEY MAY WANT TO TALK. TO THE EXTENT WE HAVE FURTHER CONVERSATIONS, THAT WOULD BE SOMETHING WE WOULD BE BRING BACK. YOU ARE AWARE WE HAVE TWO LAWSUITS. ONE IN THE COURT OF APPEAL THAT ARE STILL PENDING >> I THINK WHEN YOU THINK ABOUT REVENUE MEASURES, THINKING ELABORATE. WE WANT TO BE ABLE TO BRING BACK HAVE THAT DISCUSSION. WHAT ARE THE POSSIBILITIES, WHERE ARE WE GET IN THE REVENUE FROM AND WHERE EVER THAT SOURCE IS, HOW ARE THEY. WHETHER IT’S THE PUBLIC OR OTHER ENTITIES IMPACTED THROUGH COVID AND WHAT DOES THE RECOVERY OUT LOOK LOOK LIK AND OBVIOUSLY THE TIMING OF ALL OF THAT. THERE IS A LOT PACKED IN THERE >>Raul Peralez : THAT WAS ONE OPPORTUNITY WE TALKED ABOUT IN THE PAST. WE LOOKED AT THE EXPANSION OF MARIJUANA SALES IN OUR CITY AND CERTAINLY WITH GAMBLING, OUR CASINOS AND DISPENSARIES AND IN THE TWO HIGHEST REVENUE GENERATING SALES TAX REVENUE GENERATING BUSINESSES FOR OUR CITY. AND SO I DO THINK WE SHOULD LOOK AT WOULD EVER REVENUE SOURCES WE MAY BE ABLE TO AND I LOOK FORWARD TO THE CONVERSATIONS COMING UP. THE NEXT QUESTION IS IN REGARDS TO A LETTER THAT CAME IN YESTERDAY FROM THE POLICE OFFICERS ASSOCIATION. I DON’T KNOW IF YOU HAVE HAD A CHANCE TO SEE THAT, BUT IT TALKS ABOUT SOME OF THE FURTHER GUIDANCE ON THE USE OF THE CARES ACT DOLLARS, SPECIFICALLY FOR PUBLIC SAFETY PURPOSES NOT TALK ABOUT FUTURE DOLLARS, AND TALK ABOUT THE 178 MILLION WE CURRENTLY HAVEHAVE HAD A CHANCE TO TAKE A LOOK AT THAT ? I KNOW OBVIOUSLY YOU ARE ANSWERED IN REGARDS TO ANY FURTHER VERIFICATION WE HAVE CLEARLY WE WILL USE THEM IN THE WISEST WAY POSSIBLE, BUT WE HAD A CHANCE TO LOOK AT THAT LETTER? >> ONLY JUST. WE ARE LOOKING THROUGH THAT YESTERDAY. I DON’T KNOW IF AT THIS POINT IT CHANGES OUR APPROACH DRAMATICALLY RIGHT NOW, BUT IN THE FUTURE IT MIGHT. WEEK, THEY WANT TO JUMP IN. I KNOW YOU WOULD GIVE IT A LITTLE MORE THOUGHT AND I HAVE BEEN ABLE TO SO FAR >> STAFF WAS ABLE TO DO A HIGH-LEVEL REVIEW. WE HAVE BEEN WORKING WITH THE DEPARTMENT OF TREASURY AND OUR OWN LOBBYISTS AND SOME OF THE CODIFICATION AS WELL THAT THE GUIDANCE OUTLINED IN THE MEMORANDUM. I WOULD SAY WE DON’T NECESSARILY DISAGREE WITH THE POLICE OFFICERS ASSOCIATION, BUT WE KNOW ADDITIONAL CLARIFICATION FOR THE DEPARTMENT OF TREASURY IS COMING OUT. I THINK A LOT OF OTHER CITIES ARE INTERPRETING THAT LANGUAGE LIKE WE ARE THAT IT NEEDS TO BE SPECIFIC TO THE COVID RESPONSE AND NOT INDIRECTLY RELATED COSTS. I KNOW MOST OF THE BIG CITIES THAT GOT THE DIRECT ALLOCATION ARE PUSHING ON THAT AND THAT IS WHAT WE ARE HOPING TO GET CLARITY ON IN THE NEXT FEW DAYS FROM THEM >>Raul Peralez : HOW QUICKLY COULD WE HAVE AN UPDATE? WE ARE TALKING ABOUT RIGHT NOW COMING BACK END OF SUMMER OR FALL. HOW QUICKLY COULD WE HAVE SOME OF THESE UPDATES MAY BE ANYTHING THAT HAPPENS OVER THE NEXT SEVERAL WEEKS JIM, YOU AND YOUR TEAM CAN INCORPORATE THEM. BUT WHAT DOES THAT LOOK LIKE IN PART AS INCORPORATING THESE CHANGES IN REAL TIME? >> WHAT IT WOULD LOOK LIKE PROCESS WISE IS IF WE WERE ABLE TO COME TO AND CONCLUSION GET

CLARITY ON THESE THINGS PROCESS WISE WE WOULD ISSUE AN NBA THAT WOULD PROVIDE THAT LIBERTY AND MAKE RECOMMENDATIONS SHOULD THEY NEED TO BE ADJUSTMENTS OR SHOULD WE WANT TO MAKE ADJUSTMENTS IN THE BUDGET PROCESS PRIOR TO ADOPTION. AND I GOT THAT RIGHT? >> PENDING ANALYSIS, WE HAVE A RECOMMENDATION THAT WOULD CHANGE THE PROPOSED BUDGET FOR 2021 AND WE WOULD BRING THAT FORWARD PRIOR TO THE END OF THE FISCAL YEAR. THERE MAY BE BUDGET ACTIONS AS PART OF THE CURRENT FISCAL YEAR AS PART OF THE PROCESS WE WOULD WANT TO COME FORWARD WITH PRIOR TO THE END OF JUNE >>Raul Peralez : THANK YOU THAT’S MY QUESTIONS >>Sam Liccardo : THANK YOU JIM, THANKS AGAIN FOR THE PRESENTATION. I KNOW WE HAVE MORE WORK TO DO, BUT I WANT TO THANK BONNIE, CLAUDIA, SELENA AND BRYCE AND EVERYONE ON YOUR TEAM. I WANT TO START WITH AN ASSUMPTION THAT ARTICULATED IF I CAN PULL UP THE PAGE HERE IN THE BUDGET AROUND VII ÃÃ I’M SORRY V ÃSEVEN, WHICH IS A CHART THAT DESCRIBES 70 PERCENT OF OUR REVENUES ARE DEEMED KNOWN ECONOMICALLY SENSITIVE SO WE FOCUSED PROJECTIONS ON THE 30 PERCENT REVENUES. I KNOW YOU LOOK AT ALL THE REVENUES, BUT THE ONES YOU THINK ARE MOST IMPACTFUL. THE SALES TAX, THE TOT TAX AND OTHER REVENUE MEASURES. I WILL JUST ASK YOU GENERAL QUESTIONS TO SAVE YOU THE TIME FIRST WITH REGARDS TO THE ECONOMICALLY SENSITIVE REVENUES, TOT TAX, I THINK IT IS IMPORTANT FOR ALL OF US TO HAVE OUR EYES WIDE OPEN ABOUT THE SENSITIVITY OF THESE ASSUMPTIONS. OUR ASSUMPTION IS A 16 PERCENT DROP FROM FISCAL YEAR 18/19 IN CALIFORNIA I BELIEVE IF YOU ADJUSTED THE NUMBER IT WOULD BE A 20 PERCENT DROP. IS THAT RIGHT? >> USING THE INFORMATION I HAD THERE, GOING BACK TO SEE WHERE IT ENDED UP WHEN HE COMPARED IT TO 18/19 >>Sam Liccardo : OKAY. SO CERTAINLY THAT NUMBER COULD GET WORSE. WE WANT TO BE SENSITIVE TO THAT FACT AND THAT IS ANOTHER REASON WHY THE SET UPS ARE THE SECOND TIER BUDGETARY DECISIONS FOR US TO MAKE IN SEPTEMBER. IS THERE ANY CHANCE WE WILL HAVE SALES TAX INFORMATION AVAILABLE BEFORE WE VOTE IN JUNE? >> WE WILL HAVE THE SALES TAX AVAILABLE FOR HOW JANUARY, DORI AND MARCH. WE WILL HAVE THAT DATA. WE WILL GET THAT DATA IN THE END OF MAY HEAR. WE WILL HAVE THAT AVAILABLE TO US THAT DOESN’T SHOW AS A WHOLE LOT >>Sam Liccardo : IT AFFECTS TWO WEEKS OF THAT PERIOD >> JUST TO SHARE WITH YOU, OUR LOCAL SALES TAX IS A DESTINATION BASED SALES TAX IT WILL PERFORM BETTER. THAT WOULD GET MORE INTERNET SALES AS PART OF THE SLICE. THAT HELPS US FROM A SALES TAX PERSPECTIVE A LITTLE BIT. A LITTLE BIT OF NUANCE THERE >>Sam Liccardo : GOOD TO KNOW THE WORKING ASSUMPTION WAS AROUND THE TOT. BASED ON PAGE 22 OF THE CITY MANAGERS INITIAL BUDGET DOCUMENT, WE ARE ASSUMING A 27 PERCENT DROP IN AN 11 PERCENT INCREASE FROM THE CURRENT YEAR. SEE WHAT I AM REFERRING TO ON THAT? >> YES >>Sam Liccardo : I KNOW A LOT OF FOLKS HAVE GOTTEN HIT HARD, BUT I’M TRYING TO UNDERSTAND WHY WE THINK THERE WOULD BE AN INCREASE FROM THE CURRENT YEAR IN THE NEXT YEAR WHEN I’M GUESSING THE CONVENTION CENTER SCHEDULE HAS JUST BEEN Ã SOMEONE HIT THE DELETE KEY ON THE ENTIRE CALENDAR KNOWING THAT STUFF HAS TO GET BOOKED OUT MORE THAN A YEAR OR TWO IN ADVANCE. WHY DO WE THINK THE HOTEL TAX REVENUE WILL IMPROVE NEXT YEAR? >> THAT ASSUMPTION IS IT WILL IMPROVE BETTER TO HOW THIS CURRENT YEAR ENDED, BUT STILL BE 30 PERCENT BELOW WHERE WE WERE THE PREVIOUS YEAR. OUR MIX IS WE HAVE FOLKS ATTENDING THE CONVENTIONS THAT WILL BE SEVERELY HIT. WE ALSO HAVE A LOT OF BUSINESS INVESTMENTS AS PART OF OUR HOTEL NEXT. THOSE FOLKS WHO OWN REGULAR BUSINESS TRAVEL, NOT RELATED TO A CONVENTION PER SE, AND SO THAT

IS PART OF OUR THINKING THERE AFTER WE GET INTO THE LATER PORTION OF THE FALL MONTHSIN THE SPRING, THAT BEGINS TO KICK UP MORE . THAT IS THE THOUGHT YEAR. RIGHT NOW IN APRIL AND END OF MARCH THROUGH JUNE, THERE IS ALMOST NOTHING GOING ON FROM GAB I THINK THE THOUGHT IS IT IS STILL REALLY LOW IN SOME RANGE AND STARTS TO CREEP UP SO BY THE END OF THE YEAR YOU ARE HIGHER THAN WHERE YOU WERE IN 19/20. POINT TAKEN THE IMPACT OF THE CONVENTIONS IS GOING TO PLAY A SIGNIFICANT ROLE. HOW MUCH THAT IS ABLE TO BACKFILL WILL BE SEEN >>Sam Liccardo : I KNOW EMBEDDED IN ALL THIS IS OUR ASSUMPTIONS AROUND THINGS WE CAN’T KNOW TO BE THAT YOU’RE JUST MAKING ESTIMATES ABOUT, WHICH ARE REASONABLE ESTIMATES OR ASSUMPTIONS ABOUT WHEN THE ECONOMY IS GOING TO REOPEN. WE ARE PROTECTING A 27 PERCENT DROP IN HOTEL REVENUE OVER Ã FROM THE NUMBER TWO YEARS AGO I KNOW AIRLINE BOOKINGS ARE DOWN CLOSE TO 90 PERCENT I’M GUESSING THIS ESTIMATES WOULD BE HAPPY AT THE END OF NEXT YEAR THEY HAD A 27 PERCENT DROP IN AIRLINE BOOKINGS. THE FLIGHTS ARE GOING TO BE PROBLEMATIC REGARDLESS WHAT HAPPENS TO THE ECONOMY BECAUSE THERE WILL BE A LOT OF FEAR ABOUT GETTING ON PLANES AND THERE IS GOING TO BE A LOT OF COMPANIES WILL SAY WE WILL NOT TAKE THE LIABILITY OF PUTTING OUR EMPLOYEES ON PLANES. WE ARE JUST NOT GOING TO DO IT. AND SO WE ARE GOING TO BE STUCK WITH ZOOM FOR A WHILE. AND OBVIOUSLY THE CONVENTION THEMSELVES ARE GOING TO BE FAR MORE THAN THE 27 PERCENT DROP IN ATTENDANCE THOSE HAVE BEEN WIPED OFF THE BOOKS. I JUST WANT EVERYONE HAVE EYES OPEN ABOUT THE FACT WE ARE GOING TO HAVE TO LOOK AT THESE NUMBERS AGAIN. AND ALL THIS IS BASED ON ASSUMPTIONS AND NOBODY HAS A CRYSTAL BALL HERE. I KNOW IT IS OFTEN THE CASE WE WANT TO BELIEVE THEBEST ABOUT THE NUMBERS , BUT BEFORE WE SPEND A LOT OF TIME QUIBBLING OVER ALOT OF DETAILS IN THIS BUDGET, WE PROBABLY NEED TO BE CONSCIOUS OF THE FACT THESE NUMBERS , THE GROUND UNDERNEATH US CAN BE SHIFTING CONSIDERABLY . I GUESS IT BRINGS ME TO THE LARGER QUESTION, WHICH IS THE MULTIYEAR NATURE OF THIS EVERY RECESSION WE HAVE EXPERIENCED RESULTS IN SEVERAL YEARS OF SERIOUS BUDGET DEFICITS. YOU ALLUDED TO PART OF THAT. YOU MENTIONED, FOR EXAMPLE, WE HAVE GOT LAGGING INDICATORS AROUND PENSION AND RETIREE HEALTHCARE OBLIGATIONS THAT ARE DEPENDENT ON PLAN RETURNS WHICH WE KNOW WILL BE HORRIBLE THIS YEAR. AND WE WILL HAVE TO ACCOUNT FOR THOSE OVER THE SUCCEEDING FIVE YEARS IN ADDITION TO THAT, WE A PROPERTY TAX NO PROP EIGHT POSITIONS WILL BE FILED IN DROVES AND THOSE IMPACTS WILL BE FELT IN SUCCESS IN THE YEARS AS WELL WHICH IS THE LARGEST REVENUE SOURCE IN SUCCESSIVE YEARS THERE ARE PRETTY GOOD SALES AND SOME INDUSTRY STILL TODAY WE HAVE REAL POWERFUL INCOME EFFECTS GLOBALLY NOW AS THERE IS A DROP IN ECONOMIC ACTIVITY, DROP IN INCOME THAT WILL AFFECT THE ABILITY OF ALL THESE INDUSTRIES TO RECOVER IN THE MONTHS AND YEARS AHEAD. I GUESS THE BIG QUESTION FOR ME IS GIVEN THE FACT YOU GUYS ARE WRESTLING THIS ALLIGATOR TO THE GROUND IN THE COMING YEAR AND WE KNOW THAT IS BRUTALLY DIFFICULT TO DO WITH THE INFORMATION YOU HAVE, HOW SOON UNTIL WE CAN COME UP WITH AN ESTIMATE ROOM MULTIYEAR DEFICITS SIMILAR TO THE FIVE-YEAR PROJECTION. EVEN IF IT IS FOR TWO OR THREE YEARS SO WE CAN REALLY UNDERSTAND THE SIZE OF THIS ALLIGATOR WE HAVE TO WRESTLE? >> I THINK YOU NAMED THE TWO BIG VARIABLES THERE, WHICH IS DESIGNED FOR THE ONES WE ARE TRYING TO WRESTLE WHICH IS THE SALES TAX, BUT WHAT THE PROPERTY TAX AND WHAT RETIREMENT WILL DO. RETIREMENT RIGHT NOW. AT LEAST RIGHT NOW OUR SHORTFALL IS DRIVEN BY A REVENUE SHORTFALL. BEGINNING IN 21/22 WILL GET THE COST PRESSURES OF WHAT HAPPENS TO RETIREMENT. THAT PULMONARY EVALUATION IS IT AVAILABLE UNTIL THE END OF THE CALENDAR YEAR. THEY DO EVALUATION BASED ON HOW THINGS COME OUT JUNE 30 AND THEY GO THROUGH THE PROCESS

OF FIGURING OUT WHAT THAT IS WE HAVE BEEN BURNED BEFORE ABOUT TRYING TO ESTIMATE WHAT THAT IS PRIOR TO THAT COMING OUT. WE ARE CAREFUL ABOUT TRYING TOESTIMATE WHAT RETIREMENTS ARE GOING TO DO THAT WILL PROBABLY BE OUR EARLIEST INDICATION WOULD BE IN NOVEMBER, DECEMBER TIMEFRAME AND SOME OF THAT INFORMATION COMES OUT. I’M NOT EXACTLY SURE THE EXACT TIMING OF THE PROPERTY TAX, WE START LEARNING THAT IN THE FALL MONTHS. SO THOSE WILL BE ÃIT WILL BE A WHILE BEFORE WE CAN HAVE A GOOD HANDLE ON WHAT THE DOLLAR AMOUNT IS. A LOT OF THE GOVERNMENT REVENUES THAT COME IN, A LOT OF THEM ARE LIKE. WE ARE OFTEN BEHIND THE CURVE ON WHAT IS HAPPENING IN THE ECONOMY TAKES TIME TO FILTER THROUGH TO MUNICIPAL GOVERNMENTS. THIS WILL BE THE CASE HERE. IT IS EVEN MORE OBVIOUSLY DIFFERENT BECAUSE WE CAN SEE WHAT IS HAPPENING IN FRONTOF OUR EYES >>Sam Liccardo : I APPRECIATE THAT. I KNOW THERE IS A LOT OF HOPE. I AM AS HOPEFUL AS ANYONE ELSE, WHETHER IT IS AROUND LOOSENING RESTRICTIONS ON THE USE OF CARES ACT MONEY, ALTHOUGH I THINK WE WILL HAVE SUCH HIGH BILLS TO PAY IN TERMS OF FOOD DISTRIBUTION AND SOME OTHER THINGS, NOT SURE IT WILL MATTER. I THINK WE WILL NEED EVERY DOLLAR . BUT THE HOPE FOR A HEROES ACT TO PASS DESPITE THE PRESIDENTS POSITION AND MAJORITY LEADERS POSITION WE HOPE THE STUFF IS GOING TO PASS. THIS IS ONE TIME MONEY WE ARE GOING TO HAVE A MULTIYEAR CHALLENGE THAT IS WHAT YOU ARE FOCUSED ON HOW WE WILL SOLVE THE MULTIYEAR ONGOING PROBLEM. THAT’S WHAT COMES BACK TO THE CHART, THE POLYGRAPH YOU GOT THAT DESCRIBES A 70 PERCENT OF REVENUES THAT ARE NOT ECONOMICALLY SENSITIVE. AND THINK YOU WOULD AGREE SINCE PROPERTY TAX IS A BIG PART OF THAT AND OTHERS AS WELL, ECONOMIC SENSITIVITY IS A ÃYOU COME TO A DIFFERENT CONCLUSION ABOUTTHAT IF YOU TALK ABOUT A MULTITIER PERIOD . IS THAT RIGHT? >> WE TRIED TO PUT A NOTE THERE. IS NOT ECONOMIC SENSITIVE IN 20/21. THAT PIE CHART OPENS UP >>Sam Liccardo : OKAY. IT IS JUST A LAGGING ONE FOR IT WILL NOT BE IMPACTED THIS YEAR THERE ARE OUTLIERS THERE, BUT THE BIGGER DOWNSIDE RISK IS EVALUATION IS FOR COUNTY OF 2020 >>Sam Liccardo : WE THINK ABOUT A CITY ORGANIZATION THAT DEPENDS ENTIRELY ON PEOPLE TO DELIVER SERVICES AND THOSE ARE PEOPLE WE NEED TO MAKE COMMITMENTS TO THAT ARE GOING TO BE EMPLOYED YEAR AFTER YEAR IT JUST SEEMS TO ME AS MUCH AS WE AREGOING TO TRY TO DO EVERYTHING WE CAN TO FIND THESE ONE TIME DOLLAR SOURCES , WE CAN’T LOSE TRACK OF THE ONGOING PICTURE, WHICH IS WE NEED TO MAKE SURE WE HAVE ONGOING REVENUES. FOR THE NEXT TWO OR THREE YEARS WE KNOW IT’S GOING TO BE A MIGHTY CHALLENGE . THE SALES TAX REVENUE WE ASSUMED WOULD RESULT IN $22 MILLION IN THE AGREEMENT WITH EBAY, CAN YOU GIVE US A SENSE ABOUT THE BASIS OF THAT ASSUMPTION BASED ON NUMBERS WE MIGHT BE GETTING FROM eBay OR ANOTHER SOURCE? ARE WE PROJECTING THAT IS A LOW-END ESTIMATE? >> WE ARE TRYING TO TAKE A CONSERVATIVE APPROACH . WE HAVE ONE QUARTER OF ACTUAL DATA THERE TO MAKE THE ANNOUNCEMENT FOR THE 1920, WHAT WE PROJECTED THERE WAS $18 MILLION FOR THREE QUARTERS WITH. AND SO FOR THE ANIMALS NATION WITH $22 MILLION THERE, WHICH WE THINK GIVES US ROOM. NIGHT HOPEFULLY WILL BE ON THE CONSERVATIVE END OF THAT POINT. ESPECIALLY SINCE THAT ONE IS SO NEW TO US WE DON’T HAVE A LOT OF GOOD DATA >>Sam Liccardo : OKAY, GREAT AND THEY REALLY WANT TO THANK JULIA AND HER FINANCE TEAM GOING TO BE ABLE TO SHAKE LOOSE ON THESE. IT IS $26 MILLION AND KNOW THAT WILL BE CRITICAL FOR US AND WE ARE GRATEFUL FOR THE ONE TIME OPPORTUNITY. I JUST ONE HIGHLIGHT ONE OF THE DATA POINT. HE SAID WE WOULD HAVE 6544 POSITIONS IF WE APPROVE THIS BUDGET AS IT IS NOW. SOME CONTEXT THERE. WE HAD 7400 EMPLOYEES 20 YEARS AGO AND WE HAD MORE THAN 200,000

MORE PEOPLE TO SERVE TODAY AND WE HAD 20 YEARS AGO. SO HOPEFULLY WE ARE CONTINUING TO BE AS FORTHRIGHT AS WE CAN BE WE HAVE FEWER EMPLOYEES SERVING A LOT MORE PEOPLE AND THOSE EMPLOYEES ARE WORKING INCREDIBLY HARD AND THEY ARE BEING VERY INNOVATIVE AND THEY ARE BEING VERY RESOURCEFUL BECAUSE THEY HAVE TO BE. HAVE CERTAINLY IMPROVED SOME OFTHE TOOLS ON SOFTWARE TO HELP THEM BE MORE EFFICIENT , BUT WE ALSO HAVE TO BE REALISTIC ABOUT OUR EXPECTATION ABOUT SERVICES AND WHAT WE CAN DELIVER BECAUSE OF THIS REALITY. I APPRECIATE EVERYONE WHO IS WORKING SO HARD UNDER THE DIFFICULT CIRCUMSTANCES. ON SLIDE NUMBER 12, IT DESCRIBES THE SHARE THAT GOES PUBLIC SAFETY AND DIFFERENT OTHER SERVICES OBVIOUSLY PUBLIC SAFETY IS THE MAJORITY OF OUR SPENDING HERE THAT IS AS IT SHOULD BE. WE KNOW OUR RESIDENTS VALUE PUBLIC SAFETY ABOVE ALL THE OTHER SERVICES DELIVERED, BUT I WANT TO UNPACK THIS A LITTLE BIT BECAUSE AS I UNDERSTAND IT, PUBLIC SAFETY EXPENDITURES ARE HAPPENING IN SOME OF THE OTHER SLICES. FOR EXAMPLE, NON-DEPARTMENTAL AND GENERAL GOVERNMENT. WE OF CITY ATTORNEY SPENDING ALL THEIR TIME LITIGATING POLICE CASES AND WEHAVE HR WHO ARE HIRING FIREFIGHTERS AND DEALING WITH PERSONNEL ISSUES . IS THAT RIGHT? >> RIGHT. SOME OF THAT STRATEGIC SUPPORT YOU SEE, ESPECIALLY IN GENERAL GOVERNMENT SLICE THERE, WE SEE THE FINANCE AND HR DEPARTMENTS DEFINITELY ARE PART OF THAT ROLE. EVEN IN THE NON-DEPARTMENTAL, THERE MAY BE CITYWIDE COMPONENTS FOR THE MAYOR’S GANG PREVENTION TASK FORCE IS PART OF THAT, WHICH ALSO IS FOCUSED ON PUBLIC SAFETY AS WELL >>Sam Liccardo : RIGHT. AND CAPITAL MAINTENANCE TO BE IN FIRE STATIONS, FOR EXAMPLE? >> A SMALL PORTION OF THAT >>Sam Liccardo : I KNOW THIS CAN BE DECEIVING ÃI KNOW THIS IS A GENERAL CUT BASED ON HOW THE CATEGORIES OF THE BUDGET ARE SET UP, BUT THE TRUTH IS WE SPEND QUITE A BIT MORE THAN HALF OUR BUDGET ON PRIVATE SAFETY AND I DON’T WANT ANYONE BELIEVING IT’S NOT HIGHLY ENOUGH VALUE IN OUR BUDGET BECAUSE IT’S A REALLY LARGE SHARE OF OUR BUDGET. AND AS IT CERTAINLY SHOULD BE. WANT TO MAKE SURE WE ARE BEING TRANSPARENT ABOUT THAT FACT AND THEN FINALLY, WE MENTIONED IN THE TOT CONTACT THERE ARE ASSUMPTIONS EMBEDDED ABOUT WHEN THE ECONOMY WILL REOPEN. I WOULD JUST ASK IN THE NEXT COUPLE WEEKS THROUGH A BUDGET DOCUMENT, HOWEVER YOU THINK IS APPROPRIATE, IF YOU COULD SERVICE THOSE ASSUMPTIONS AS MUCH AS POSSIBLE ABOUT WHEN THE BUDGET TEAM IS BELIEVING THAT ECONOMY IS GOING TO REOPEN NOT BECAUSE WE ARE GOING TO RELY ON YOU FOR THE ASSUMPTIONS OR WE ARE GOING TO EXPECT YOU TO PLAY PUBLIC HEALTH OFFICER, BUT BECAUSE WE KNOW THE ASSUMPTIONS UNDERLYING A LOT OF PROJECTIONS YOU ARE MAKING ABOUT WHAT IS GOING TO HAPPEN WITH DIFFERENT ECONOMIC INDICATORS. IT SEEMS TO ME AS WE ARE HEARING MORE FROM PUBLIC HEALTH AUTHORITIES THAT MAY CHANGE, WHETHER WE BELIEVE THOSE ASSUMPTIONS ARE CORRECT OR NOT, IT WOULD BE HELPFUL FOR ALL OF US TO BE AWARE OF THAT SO WE KNOW IF WE NEED TO GO BACK INTO SOMETHING THAT IS TRANSPARENT TO ALL OF US ABOUT THOSE EMBEDDED ASSUMPTIONS. IS IT POSSIBLE TO DO? >> WE CAN DO A DEEPER DIVE >>Sam Liccardo : GREAT >> IF I CAN ADD, I TOTALLY SEE THE VALUE OF WHAT YOU ARE ASKING FOR THEIR BECAUSE WE WANT TO MAKE SURE THAT THOSE ASSUMPTIONS ARE VERY OPEN AND PUBLIC TO EVERYONE. I THINK WHAT YOU ARE POINTING OUT AND MAYBE IT IS SOMETHING WE ARE ALL TRYING TO FIGURE OUT, IS HOW DOES THAT COMPARE TO THE REALITY THAT UNFOLDS AHEAD OF US. WITH PUBLIC HEALTH ORDERS AND HOW WE ALL RESPOND. WE NEED TO BE ABLE TO DO THAT AS WE GO AND UNDERSTAND WHERE OUR ASSUMPTIONS ARE AND HOW THINGS ARE CHANGING IN THE PLANE ON THE WAY BE PREDICTED OR NOT AND WHAT ADJUSTMENTS DO WE NEED TO MAKE ALONG THE WAY. SO POINT WELL TAKEN >>Sam Liccardo : THANK YOU COUNCILMEMBER PERALEZ? >>Raul Peralez : IT WAS ACTUALLY JUST IN REGARDS TO THE TOT FUNDS. HAD SOME QUESTIONS THERE TO. AND DIDN’T KNOW IF I SHOULD SAVE IT FOR THE CITY SERVICE AREA. AS THE LIAISON FOR TEAM SAN JOSE SITTING ON THE BOARD MEETINGS, THE LAST ONE THEY INITIALLY HAD PROJECTIONS AND HAD SOME RESCHEDULING OF EVENTS TO THE

FALL. AND THAT WAS A MONTH OR SO AGO, TWO MONTHS ALMOST THAT STARTED HAPPENING. ALL THOSE NOW FOR EITHER CANCELING OR GETTING RESCHEDULED AS WELL AND SO THEY INITIALLY HAD PROJECTIONS THEMSELVES THROUGH TEAM SAN JOSE THAT LOOKED MORE FAVORABLE FOR NEXT YEAR. AND I THINK THEY ARE BEGINNING TO BE MORE REALISTIC IN REGARDS TO WHAT IT ACTUALLY LOOKS LIKE ESPECIALLY CONSIDERING THE GOVERNORS ROADMAP ON REOPENING, IT DOESN’T EVEN LOOK LIKE THE NORMAL CONVENTIONS WE WOULD HAVE THAT WOULD GENERATE A LOT OF REVENUE WOULD BE EVEN ALLOWED FOR THE TIME BEING AND SO I ALSO WAS SCRATCHING MY HEAD A LITTLE BIT. JIM KNOWS I REACHED OUT TO HIM IN THAT REGARD ON WHAT THAT LOOKS LIKE I WOULD ECHO WITH THE MAYOR SAID THERE. AND I WOULD LIKE FOR OUR STAFF TO CONNECT WITH TEAM HOME SAN JOSE STAFF AND GET BETTER PROJECTIONS ON WHAT WE THINK IT’S GOING TO LOOK LIKE FOR THEM FOR THE NEXT YEAR. I KNOW THEY WERE ALSO TALKING ABOUT THE REAL LEAK OUTLOOK AND WHAT THEY ARE THINKING FORWARD AGAIN, I THINK SOME OF THIS WAS LOOKING POSITIVE BECAUSE THEY WERE RESCHEDULING AND PEOPLE WERE THINKING MAYBE THE ECONOMY WAS GOING TO REOPEN A LITTLE SOONER. EVEN AS WE DO REOPEN, I THINK WE ALL RECOGNIZE THIS GOING TO BE CHALLENGES WITH THE CONFIDENCE OF OUR PUBLIC AND COMMUNITY AND BEING ABLE TO JUST GO BACK OUT AND PARTICIPATE IN A CONFERENCE LIKE WHAT WE HAVE HAD AT THE CONVENTION CENTER. AND SO I’M ALSO CONCERNED ABOUTTHOSE NUMBERS , BUT IT LOOKS LIKE THE MAYOR IS SET OUT A PLAN FOR US AND IS TRYING TO ADDRESS THAT >> IF I COULD, WE WILL DEFINITELY WANT TO DIG INTO THOSE MORE. I DO KNOW WE WERE CLOSELY WITH TEAM SAN JOSE AND PART OF OURCONVERSATIONS YOUR INFORMATION IS ALWAYS GOING TO COME TO LIGHT. EVERY YEAR WE ARE UPDATING REVENUE UP UNTIL WE FINALLY REDUCE THE ADOPTED BUDGET. ANYTHING NEW WE LEARNED BETWEEN ONE WILLACT ON THE ESTIMATES A COUPLE WEEKS AGO VERSUS WHAT WE ARE GOING TO END THE , IF WE SEE SOMETHING IS DIFFERENT, WE WILLBRING THAT FORWARD >>Sam Liccardo : THANKS, JIM I KNOW YOU’RE USED TO SHOOTING AT MOVING TARGETS. THIS ONE IS JUST MOVING REALLY FAST COUNCILMEMBER PERALEZ, DID YOU HAVE ANYTHING MORE ON THAT ISSUE? >>Raul Peralez : NO. I’M SORRY. I WILL LOWER MY HAND >>Sam Liccardo : THANKS EVERYBODY. WE ARE NOW AT 11:37 AM THREE WANT TO JUMP INTO THE NEXT SECTION AND THEN WE WILL TAKE A BREAK AT 12:00? >> THAT WORKS. LET ME PULL UP ÃSO EVERYONE IS AWARE, HERE IS WHERE OUR ÃCAN YOU SEE MY STUDY SESSION SCHEDULE? >>Sam Liccardo : YES >> THIS IS FOR EVERYONE TO VIEW. WE HAVE A LITTLE BIT BEHIND HERE, BUT COMMUNITY ECONOMIC DEVELOPMENT WOULD BE THE NEXT. AGAIN, DIFFERENT THIS YEAR. WE DON’T HAVE SPECIFIC PRESENTATIONS. WE STAFF AVAILABLE ONLINE READY FOR QUESTIONS >>Sam Liccardo : JUST QUESTIONS ON THE SCHEDULE? >> WHAT JIM IS SAYING IS WE WILL NOW TAKE QUESTIONS ON COMMUNITY AND ECONOMIC DEVELOPMENT >>Sam Liccardo : FORGIVE ME THERE IS NO FORMAL PRESENTATION? OKAY. I DIRECT EVERYONE’S ATTENTION THEN TO COMMUNITY ECONOMIC DEVELOPMENT, WHICH THERE IS A DASHBOARD ANOTHER HAVE BEEN CHANGES IN THE APPROACH HER, WHICH I APPRECIATE HAVING THESE DASHBOARDS OFFERED IN MODIFIED FORM HERE. VI AND THE MORE SENSITIVE PORTIONS ARE EMBEDDED WITHIN THE DEPARTMENT SUMMARIES LATER IN THE BINDER. WE WILL TAKE QUESTIONS ON COMMUNITY ECONOMIC DEVELOPMENT, WHICH INCLUDES HOUSING ALONG WITH MANY OTHER SERVICE GRANTS ETC COUNCILMEMBER ESPARZA? >>Maya Esparza : THANK YOU, MAYOR. I HAD SOME QUESTIONS ABOUT, STARTING WITH ECONOMIC DEVELOPMENT. I NOTICED WE ARE DELETING THE RETAIL POSITION BECAUSE RETAIL OVERALL IS DOWN, BUT WE ARE ADDING FUNDING FOR RETAIL RECOVERY PROGRAM. DO WE HAVE PLANS TO ADD TO THAT RETAIL POSITION? PARTICULARLY

AS WE RECOVER FROM COVID , WE DON’T WANT EMPTY STOREFRONTS IN SAN JOSE AND WE WENT DIVING BUSINESSES AND THRIVING COMMERCIAL AREAS INOUR CITY ARE WE GOING TO REVIEW THIS NEED IN MIDYEAR BUDGET REVIEW OF OUR FINANCIAL CONDITION IMPROVES? >> I WILL SEE IF KIM WANTS TO JUMP ONLINE AND TALK MORE SPECIFICS >> I AM HAPPY ÃFORTUNATELY WE HAD RECRUITED A VERY EXPERIENCED RETAIL SPECIALIST THIS WAS IN THE BUDGET LAST YEAR. WE WERE NOT ABLE TO HIRE THAT PERSON BECAUSE IT IS THE RESPONSIBLE THING TO DO NOW TO IMPLEMENT THE HIRING FREEZE AND IN THE FUTURE, AT SOME POINT IF WE CAN HAVE A FULL-TIME ADDITIONAL RETAIL SPECIALIST TO WORK CITYWIDE, IN PARTICULAR DISTRICTS, THAT WOULD BE A DESIRABLE THING THE REALITY OF THE CURRENT SITUATION IS WE THINK IT IS BEST TO RETAIN OUR CORE BUSINESS DEVELOPMENT TEAM AND THE BUDGET INCLUDES SOME CONSULTING AND NONPERSONAL RESOURCES THAT WE CAN USE TO ASSIST WITH PARTICULAR SITUATIONS. WE THINK WE CAN MAKE THAT WORK. IT IS CRITICALLY IMPORTANT WE DO EVERYTHING WE CAN TO SUPPORT OUR RETAIL BUSINESSES GOING FORWARD >> AND WE EXPLORE THE POSSIBILITY OF USING CARE SECTOR FUNDS TO ADDRESS THIS NEED? >> I DON’T THINK ÃNOT THIS PARTICULAR GENERAL NEED FOR RETAIL SPECIALIST AND RETAIL SUPPORT. WE ARE LOOKING AT THE CORONAVIRUS RELIEF FUND FUNDING TO SEE IF IT CAN BE USED TO PROVIDE ASSISTANCE TO SMALL BUSINESSES AND NONPROFITS >>Sylvia Arenas : AND SO THAT FUNDING COULD BE ÃASKING ABOUT THIS BECAUSE IN SO MANY DEPARTMENTS IN OUR CITY, WE ARE VERY LEAN WHEN IT COMES TO PEOPLE. SO WE ARE EXPLORING MONEY FOR THE ACTUAL ASSISTANCE. TO BE HAVE THE CAPACITY TO WORK WITH BUSINESSES TO PROVIDE THAT? PARTICULARLY GIVEN IN THE AFTERMATH. I KNOW WE ARE STILL IN AN, BUT PARTICULARLY IN THE AFTERMATH OF COVID.> THINK WE WILL HAVE TO DO THE BEST WITH THE STAFF WE HAVE. I KNOW WE ARE IN THE PROCESS OF TRANSITIONING FROM AN EMERGENCY OPERATION TO A RECOVERY OPERATION. AS WE DEVELOP THE PLAN FOR THE RECOVERY OPERATION, WE WILL LOOK FOR OPPORTUNITIES TO CONTINUE TO HAVE DEDICATED STAFF TO FOCUS ON RECOVERY A SMALL BUSINESSES AND NONPROFITS >>Sylvia Arenas : THANK YOU. I DO THINK THIS IS SOMETHING WE SHOULD PAY ATTENTION TO AS WE REVIEW FUNDING OPPORTUNITIES THAT MIGHT BE MADE AVAILABLE TO US. AGAIN, AS WE ARE STILL IN THE CRISIS, WE ARE NOT OUT OF THE CRISIS, ONE OF THE CONCERNS WE HAVE HAD FROM THE BEGINNING IS THE IMPACT ON SMALL BUSINESSES IN NEIGHBORHOODS THROUGHOUT THE CITIES. I KNOW THE MAYOR OF LA HAS MADE STATEMENTS ABOUT IT POSSIBLY HAVE ALL THE BUSINESSES IN LA CAN BE GONE BY THE TIME COVID IS OVERBROAD WE CERTAINLY DON’T WANT THAT HERE IN SAN JOSE. WE WANT BUSINESSES AND JOBS DRIVING, BUT FROM PHYSICAL LANDSCAPE, WE WANT FULL STOREFRONTS, NOT EMPTY ONES HAD ANOTHER QUESTION. A QUICK QUESTION FOR THE FINANCE DEPARTMENT. ABOUT ÃI KNOW WE ADDED CRITICALLY NEEDED POSITIONS, BUT DO WE ACTUALLY HAVE THE CAPACITY TO DEAL WITH ALL THE COVID WORK IN RECONCILING FEMA, CARES ACT, HEROES ACT FUNDS THAT HAVE BEEN SPENT AS WELL AS PLANNING THE FUTURE FINANCIAL OPPORTUNITIES THAT MIGHT BE AVAILABLE? A LOT OF ACTUAL WORK ON THE BUDGET OFFICE >> JIM, THIS IS JULIA. DO YOU WANT ME TO ANSWER? SO WE ARE EVALUATING THE CURRENT

RESOURCES WE HAVE. WE DO HAVE STAFF IN THE PACKAGE FOR REDUCTION AND MAY HAVE TO SWAP OUT OF THE POSITIONS TAKING INTO ACCOUNT SOME OF THE CARES ACT TALE THAT COMES ALONG WITH RECONCILING ALL THE STUFF. OUR ASSISTANT DIRECTOR IS TAKING A LEADERSHIP ROLE IN THE RECOVERY TEAM EFFORT TO MAKE SURE WE ARE IN COMPLIANCE WITH ALL THE GRANT AND RESTRICTIONS ASSOCIATED WITH THE FUNDING COMING TO THE CITY >>Sylvia Arenas : OKAY. THANK YOU. I HAVE SOME QUESTIONS FOR HOUSING. IS THERE SOMEBODY FROM HOUSING ONLINE >> I’M ONLINE >>Maya Esparza : I HAD A QUESTION ABOUT THE POLICY PROGRAM STAFFING IN THE HOUSING PLANNING AND POLICY DEVELOPMENT PROGRAM ON PAGE VII/ 153. IS THAT POSITION REPLACING CONSULTANT WORK OR IS THAT BEING ADDED TO EXISTING CONSULTANT CONTRACTS WE HAVE USED FOR THAT WORK? >> IS JUST REALLY GIVING US MORE CAPACITY. WE ACTUALLY HAVEN’T BEEN ABLE TO GET CONSULTANTS TO WORK ON ALL THESE PARTICULARITEMS . WE HAVE SUCH A FULL LOAD POLICY WORK THAT WITHOUT ADDING STAFF WE CAN’T COMPLETE IT ALL IN A TIMELY FASHION >>Maya Esparza : OKAY. AND THEN ON ITEM ÃON ITEM NUMBER Ã WAIT, SORRY. I’M ON THE WRONG PAGE. ITEM NUMBER FIVE. ON ITEM NUMBER FIVE ON PAGE 154 ON THE RESPONSIBLE LANDLORD ENGAGEMENT INITIATIVE, I REALIZE THE OTHER ITEMS ON THE LIST ARE NOT GENERAL FUND ITEMS AND THIS ONE IS. BUT $205,000, WHY IS THAT SO LOW GIVEN WE HAVE A VAST NUMBER OF TENANTS WHO ARE VERY VULNERABLE RIGHT NOW, PARTICULARLY COVID . THEY WERE BEFORE THIS AND ESPECIALLY NOW. WHAT IS THAT REALLY GETTING US? >> SO ACTUALLY THIS ITEM IS NO LONGER BEING FUNDED. THE PROGRAM FALLS UNDER CATHOLIC CHARITIES UMBRELLA AND THEY ARE NO LONGER OPERATING. IT WAS CUT AS A RESULT OF THE PROGRAM MANAGER RETIRING. AND SO THEY DECIDED NOT TO CONTINUE THE PROGRAM ANYMORE >>Maya Esparza : OKAY. SO THEN WHAT ARE WE DOING AS A CITY TO PROTECT VULNERABLE TENANTS FOR EXAMPLE, WE HAD VALLEY PALMS COME BEFORE US IN A HEARING AND WE HAD TO LISTEN TO NUMEROUS EXAMPLES FROM BOTH VALLEY PALMS AND AS WELL AS FOX TILL RESIDENTS BRING UP SOME ISSUES THEY WERE DEALING WITH AND THIS WAS ALL BEFORE COVID SINCE COVID AND IN MY OFFICE HAS RECEIVED A LOT OF CALLS AND CONCERNS ABOUT LIVING CONDITIONS AROUND SOME THINGS, SOME BAD ACTORS ARE DOING. HOW ARE WE AS A CITY PLANNING TO ADDRESS THAT IN THE YEARS BUDGET? >> SHOULDN’T SPEAK FOR THE OTHER DEPARTMENTS, BUT I DO THINK THERE ARE COORDINATED EFFORTS. THERE ARE PROGRAMS WHERE THE CITY IS TARGETING PARTICULAR NEIGHBORHOODS TO LOOK AT HOW WE CAN ADDRESS CRIME AND LIVING CONDITIONS AND CERTAINLY THROUGH THE NEIGHBORHOOD CSA, WHICH YOU WILL BE HEARING TOMORROW AFTERNOON, THAT IS ONE OF THE ISSUES THAT WE AS A CITY WOULD LIKE TO GET MORECOORDINATED ON IS HOW DO WE BRING TOGETHER OUR EFFORTS TO ADDRESS NEIGHBORHOOD SPECIFIC ISSUES WHEN IT COMES TO TENANTS AND LIVING CONDITIONS. THAT WOULD BE SOMETHING WE’LL WANT TO COLLABORATE WITH CODE ENFORCEMENT, THE HOUSING DEPARTMENT, PRNS AND THE POLICE DEPARTMENT. THAT TAKES A

COLLABORATIVE EFFORT AND IT IS ONE OF OUR GOALS TO LOOK AT THROUGH THE NEIGHBORHOOD CSA >>Maya Esparza : I’M AWARE OF PROJECT HOPE. I HAVE A PROJECT HOPE SITE IN MY DISTRICT AND I HAVE SOME OTHER JANE HOTSPOTS IN MY DISTRICT THAT HAVE NOT MADE THIS YEAR’S LIST FOR PROJECT HOPE AND SO THAT IS NOT JUST VIOLENCE PREVENTION THERE ARE A LOT OF ISSUES WITH HOUSING. AND AGAIN, I KNOW HAVING A PLACE-BASED APPROACH IS ONE OF OUR STRATEGIES. WHAT IS OUR OVERALL STRATEGY TO ADDRESS THIS NEED? DO WE HAVE ONE OR DO WE NOT HAVE ONE? PARTICULARLY AS WE GO INTO COVID >> AGAIN, I THINK THAT IS SOMETHING THE NEIGHBORHOOD CSA IS THE AREA WHERE WE WOULD TRY TO ADDRESS THE COMMUNITY PLACE-BASED SOLUTIONS AND THIS SOMETHING THAT CERTAINLY WE COULD BE DOING BETTER ON. IT DOES REQUIRE COORDINATION ACROSS ALL THE DEPARTMENTS AND IT HAS BEEN A PRIORITY TO BEGIN TO REFOCUS OUR WORK ON THIS PLACE-BASED INITIATIVES THAT ALL THE DEPARTMENTS WERE AT ONE POINT MEETING SEPARATELY, BUT WE ARE TRYING TO MOVE INTO THE SAME DIRECTION >>Maya Esparza : WE ARE PROVIDING ASSISTANCE BUT IT HAS TO BE PLACE-BASED? SO IF YOU DON’T LIVE IN ONE OF THE PLACES YOU CAN GET THAT ASSISTANCE? >>ON THE HOUSING SIDE GENERALLY WE DO PROVIDE ASSISTANCE . IF YOU LIVE IN THE RENT-STABILIZED APARTMENT OR IF YOU ARE IN AFFORDABLE APARTMENT, IF WE HEAR THROUGH THE COMMUNITY THERE IS AN ISSUE, WE CAN CERTAINLY INTERVENE >>Maya Esparza : DO WE HAVE PLANS TO ASSESS THOSE EFFORTS GIVEN THE CRISIS WE ARE IN IN THE AFTERMATH? >> WE DON’T REALLY HAVE THE STAFF CAPACITY TO BE PROACTIVE IN THE WAY IT SOUNDS LIKE YOU WOULD LIKE US TO BE. WE ARE TYPICALLY REACTIVE AT THIS POINT WE ARE COMPLAINT BASED, WE HEAR ABOUT SOMETHING AND THEN WE CAN MOVETOWARD IT BUT BECAUSE OF STAFFING LEVELS, IT MAKES IT VERY CHALLENGING TO BE MORE PROACTIVE. THE INITIATIVE WE WERE DISCUSSING EARLIER IN THE GANG PREVENTION TASK FORCE TEND TO BE MORE PROACTIVE INITIATIVES, BUT ON THE CODE ENFORCEMENT SIDE AND HOUSING SIDE, WE DO TEND TO BE MORE REACTIVE, WHICH IS WHY TRYING TO GET THE OTHER PROACTIVE INITIATIVES I THINK WOULD BE HELPFUL TO US TO BETTER USE OUR RESOURCES TO ADDRESS THESE PARTICULAR CHALLENGES IN NEIGHBORHOODS >>Maya Esparza : THAT BRINGS ME TO THE NEXT ITEM. SO NUMBER EIGHT, WE ARE ADDING A COMMUNITY POSITION TO PREPARE COMMUNICATIONS AND TALKING POINTS. SO HOW IS THAT A RESOURCE THAT HAS BEEN PRIORITIZED? ESPECIALLY GIVEN THE CRISIS WE ARE IN. THIS WOULD BE A SECOND COMMUNICATIONS POSITION, CORRECT? >> NO, ACTUALLY, THIS POSITION ÃTHIS IS A POSITION THAT IS AN ASSISTANT TO ME . I AM ELIMINATING AN ANALYST POSITION THAT CURRENTLY PROVIDES MY SUPPORT AND INSTEAD OF CREATING AN ASSISTANT TO THE DIRECTOR WHO WOULD NOT ONLY PREPARE COMMUNICATIONS, BUT IS REALLY HELPING ORGANIZE THE DEPARTMENT REGARDING OUR MEMOS. I THINK SOMETIMES WE REDUCE 60 TO 80 DIFFERENT MEMOS A YEAR AND IT’S ENSURING OUR MEMO PREPARATION IS ON TRACK. THAT WE ARE COORDINATING WITH THE CITY COUNCIL OFFICES, WE ARE GETTING OUR PRESENTATIONS TO THE COUNCIL IN A TIMELY FASHION SO IT’S REALLY THE POSITION THAT PROVIDE SUPPORT TO ME IN ENSURING MY COUNSEL COMMUNICATIONS AND MEMOS ARE TIMELY AND EFFICIENT AND WELL DONE >>Maya Esparza : LASTLY, I HAD A COMMENT WITH THIS BEING AS AN EXAMPLE. I DID GO THROUGH THE EQUITY REVIEW OF THE PROPOSED BUDGET. I APPRECIATE THE

EFFORTS VERY MUCH, HOWEVER, TO BE FRANK, IT LOOKS LIKE WE WERE FINDING WAYS TO JUSTIFY THINGS WE FELT WERE GOOD TO DO ANYWAY ONE OF MY CONCERNS IS IF WE HAD EQUITY FRAMEWORK AND AN OPPORTUNITY FOR THE COUNCIL TO BE ÃI REALIZE WE ARE IN A CRISIS, BUT IT HAS BEEN PRECISELY FOR THAT REASON THAT WE NEED MORE SERVICES. FOR EXAMPLE, ON TENANT AND LANDLORD MITIGATION AND PROTECTION. WE ARE IN A CRISIS AND WE HAVE ZIP CODE INFORMATION NOW THAT HAS BEEN RELEASED THAT SHOWS EXACTLY WHERE SOME OF THESE COVID CASES ARE AND THEY ARE GENERALLY IN OVERCROWDED LIVING CONDITIONS. I WILL GIVE YOU SOME EXAMPLES. SEVEN TREES AND ROUNDTABLE AND 95111, ROCK SPRINGS AND 95112. NOT TO MENTION 95116 AND 95127 THAT HAVE THE LARGEST NUMBER OF COVID CASES. BUT ALSO, IF YOU OVERLAY OVERCROWDING MAPS ON TOP OF THAT, THAT IS AN ISSUE REALLY NEED TO LOOK AT AS A CITY. AND SO I WILL LEAVE IT AT THAT AT THIS POINT. THANK YOU >>Sam Liccardo : THANK YOU COUNCIL MEMBER DAVIS, YOU HAVE A FEW MINUTES IF YOU DON’T MIND US INTERRUPTING YOUR QUESTIONS AT SOME POINT TO TAKE A BREAK >>Dev Davis : IS NOT A PROBLEM FOR HIM I WOULD LIKE TO START WITH THE DASHBOARD. AND MAYBE THIS WILL GET US RIGHT TO NOON FOR THE AFFORDABLE HOUSING UNITS TARGET FOR 2021, I DON’T UNDERSTAND WHY IT IS UNDER 300 WHEN THE 1920 ESTIMATE IS ABOUT 400 UNITS. WHEN WE ARE GETTING ALL THIS ADDITIONAL FUNDING FOR AFFORDABLE HOUSING. IN MY DISTRICT ALONE I HAVE MORE THAN 250 UNITS IN DEVELOPMENT RIGHT NOW. I DON’T KNOW WHAT WE ARE TALKING ABOUT IN TERMS OF WHY THIS ESTIMATE IS SO SMALL >> RACHEL IS GOING TO TAKE THAT ONE. > RACHEL VANDERVEEN FROM HOUSING. SO THIS NUMBER, WHAT IT IS IS SHOWING THE NUMBER OF UNITS WE EXPECT TO BE COMPLETED AND WE DETERMINE COMPLETION BY THE NUMBER OF UNITS ISSUED AN OCCUPANCY PERMIT DURING THAT YEAR. AND SO WHAT YOU ARE SEEING IN THE 19/20 YEAR IS THAT SECOND STREET STUDIOS WAS COMPLETED AND THERE WERE ALSO VILLAGE IN THE PARKS. MADE SPECIFIC PROJECTS UNDERWAY FOR A NUMBER OF YEARS THAT ACTUALLY COMPLETED AND GOT THERE CERTIFICATE OF OCCUPANCY IN THE MOST RECENT YEAR. IS A WHAT NEXT YEAR’S NUMBER IS IS AN ESTIMATE OF WHICH PROJECTS WE EXPECT TO BE COMPLETED NEXT YEAR. WHAT IT DOESN’T REALLY SHOW YOU IS HOW MANY MORE ARE IN THE PIPELINE. BECAUSE THERE ARE MANY MORE THAT ARE IN SOME FORM OF PREDEVELOPMENT OR GETTING FUNDING COMMITMENTS NOW AND ARE JUST STARTING TO CONTEMPLATE BREAKING GROUND AND MOVING INTO THE CONSTRUCTION PERIOD. IT’S A VERY SPECIFIC NUMBER >>Dev Davis : HOW MANY PROJECTS DOES THAT 2021 TARGET ENCOMPASS AND WHAT ARE THOSE PROJECTS? BECAUSE IT IS LESS THAN 300 UNITS. I HAVE ONE ON PARK AVENUE THAT PROBABLY DOESN’T HAVE THE CERTIFICATE OF OCCUPANCY YET, BUT THEY ARE VERY CLOSE. I HAVE ANOTHER ONE ON SOUTHWEST EXPRESSWAY THAT I’M HOPING THEY WILL FINISH IN THE NEXT FISCAL YEAR. THAT IS PARTWAY DOWN. AND THAT GETS US ALMOST TO THAT ÃTHAT HAS GOT TO GET AS CLOSE >> I KNOW FOR A FACT THAT TO YOU ARE TALKING ABOUT ARE INCLUDED IN NEXT YEAR’S. THOSE ARE ONES WE ARE COUNTING. I THINK IT JUST HAPPENS THAT THE ONES THAT ARE COMPLETING ARE

ONES YOU ARE FAMILIAR WITH THOSE ARE THE BULK OF THE PROJECTS WE ARE EXPECTING TO GET BE COMPLETED NEXT YEAR >>Dev Davis : THERE ARE NO OTHER AFFORDABLE HOUSING PROJECTS? EXPECTED TO COMPLETE IN THE NEXT YEAR? EVEN IN MY DISTRICT? >> THERE IS ACTUALLY ANOTHER DEVELOPMENT, NORTH SAN PEDRO WILL BE COMPLETED. MY GUESS IS THE RESIDENCE PLAYSET GOT COMPLETED, THEY GOT THERE CERTIFICATE THIS YEAR AND THAT WAS 160. IN THE NEXT ÃSO THE PRIMARY DEVELOPMENTS ARE JUST FINISHING UP THE FIRST TWO YEARS AND WE HAVE A NEXT WHOLE ROUND OF 856 THAT ARE STILL IN SOME FORM OF PRE-DEVELOPMENT AND MOVING FORWARD NOW >>Dev Davis : AND SO THESE ARE ONLY PERMANENT HOUSING UNITS? WE ARE NOT GOING TO BE INCLUDING OUR BRIDGE HOUSING IN DISCOUNT AT ALL FOR EMERGENCY HOUSING? >> THEY ARE NOT CONCLUDED INCLUDED IN THIS PARTICULAR ITEM, NO. WE CONSIDER AFFORDABLE HOUSING UNITS PERMANENT >>Dev Davis : OKAY. SO WE WILL HAVE ABOUT THIS MANY NUMBER OF UNITS AVAILABLE IN BRIDGE HOUSING AS WELL? COMING ONLINE IN THE NEXT THREE MONTHS? >> YES. WE WILL. BECAUSE WE WILL HAVE THE 300 AND RUMP EMERGENCY HOUSING AND THEN WE HAVE THE 90 TRAILERS OPENING UP TODAY, 30 OF THEM >>Dev Davis : OKAY. IT KIND OF MAKES THE CASE FOR THE INTERIM HOUSING. JUST LOOKING AT THE TARGET AND TALKING ABOUT HOW LONG IT TAKES. I APPRECIATE THAT. I THINK I TOOK US OVER BY A MINUTE >>Sam Liccardo : APPRECIATE IT SO WE WILL PICK UP AGAIN WITH COUNCILMEMBER DAVIS WHEN WE RESUME AT 1:00. THANKS EVERYBODY. ENJOY YOUR LUNCH [RECESS]