Los Altos city finances are beginning to rebound after being handcuffed by the pandemic. But officials are tempering optimism amid uncertainty as the recovery proceeds.

Despite lost revenue over the course of the COVID-19 lockdown, Los Altos presented balanced general fund budgets for the 2021-2022 and 2022-2023 fiscal years, according to numbers presented to the city council last week. The council June 22 adopted a $48.8 million operating budget for 2021-2022 and a $50.9 million budget for 2022-2023. Also adopted was a five-year capital improvement program for 2022-2026 and 2021-2022 transient occupancy and utility users tax rates.

“The TOT (transient occupancy tax, applying to taxes from the city’s three hotels) is beginning to start a slow recovery,” Deputy City Manager Jon Maginot told the council last week. “Recreation fees (from resuming programs) are beginning to return. We can start doing a lot more than perhaps we were able to do even a month ago.”

Property taxes, however, usually a strong source of revenue, are currently “modest,” Maginot reported, with a 5.1% increase projected for 2021-2022 and 3% for 2022-2023. Sales-tax revenues are “running relatively flat.” Six full-time city positions, including financial services manager, remain frozen.

Also uncertain is the arrival of an expected $7.2 million in federal funds from the Biden administration’s American Rescue Plan Act. The city is anticipating the funds in two payments, but there was no specific timeline on when the money would arrive.

Council members elected to offer a combination of general fund and Rescue Plan funds to four local nonprofit groups: Community Health Awareness Council (CHAC), which provides mental health services; WomenSV, which supports survivors of domestic abuse; the Los Altos History Museum; and Community Services Agency (CSA), which provides food and shelter to underserved residents.

After discussion over the amount of funding to allocate, the council moved to give $75,000 to CHAC, $40,000 to WomenSV, $75,000 to the museum and $55,000 to CSA for fiscal year 2021-2022.

Community center

Items on the consent calendar seeking additional funding to complete the Los Altos Community Center project met with some strong objections from council members at last week’s meeting.

Councilmember Lynette Lee Eng asked why there were further delays in project completion accounting that required additional costs. Engineering services director Jim Sandoval said there were “supply chain issues,” due to in part to the pandemic, that precipitated the delays.

In the end, the council majority approved contract amendments for construction ($49,560) and design ($43,716) costs for work through the end of August. Staff reports on the expenditures cited no additional costs to the city, with money taken from a contingency fund for the $38.34 million project. Lee Eng and Vice Mayor Anita Enander voted against the contract amendments.

“We need to get the work done,” said Councilmember Sally Meadows.

At the same time, the council directed City Attorney Jolie Houston to work with city staff to schedule a closed-session council meeting to discuss and investigate the broader issues of project delays and cost overruns.

The community center is on track for a public opening in early October.

City manager hired

In other action, the council approved a contract for Gabriel Engeland to serve as city manager.

Engeland, wrapping up his stint as city manager for the Southern California town of Sierra Madre, is scheduled to begin work in Los Altos July 19.

“We are very excited that Gabe has accepted the position of Los Altos city manager,” Mayor Neysa Fligor said in a statement. “Gabe’s background, experience and success working as a City Manager in communities similar to Los Altos make him a good fit for our community.”

“I really appreciate the city council putting their faith in me to be the next city manager,” Engeland said following the council’s unanimous vote. “A bunch of people from the community have reached out to me on LinkedIn, through email, and they’ve welcomed me, so I feel very good about this, and it reinforces that this was the right decision – we’re just really excited to start.”

In Sierra Madre, Engeland oversaw 100 staff and managed a budget of $24 million. During his tenure, he increased the general fund reserves to 95% of expenditures, led the implementation of the Water System Master Plan and transitioned the city’s volunteer fire department into a professional department.

The council selected Engeland from a pool of more than 30 candidates. His starting annual base salary is $245,095.