Costa Mesa council approves revised CIP deferrals, authorizes emergency exception to capital-asset rule

Costa Mesa — The City Council on May 6 approved a revised set of capital improvement program (CIP) deferrals and authorized an emergency exception to the city’s capital-asset needs (CAN) ordinance for fiscal year 2024–25, a move staff said is aimed at addressing an identified midyear general-fund shortfall.

Staff estimated a midyear revenue shortfall of about $3.6 million for FY 2024–25 and proposed a package of reductions including $2.9 million in capital deferrals. Finance Director Molina and CIP Director Sethuraman (staff presentation) told council that the city still has roughly 96 CIP projects funded at about $90 million, and that the recommended deferrals were selected to minimize immediate impacts on vulnerable populations and core services.

At a previous Finance and Pension Advisory Committee (FIPAC) meeting members recommended alternatives and asked staff to reconsider three facilities projects; after that discussion staff revised the deferral list. In response to public comment and council concern, the council approved a substitute motion that reflects FIPAC’s alternative (identified in council materials as “alternative 2”). The substitute motion passed 5–0.

Key vote and direction: The council authorized the emergency exception for the CAN ordinance for FY 2024–25 and directed staff to defer the CIP projects listed in the adopted alternative 2 package. Council also directed staff to return with additional budget options for FY 2025–26, including consideration of consultant contracts, vacancy eliminations, and potential adjustments to reserves or CAN language. The council asked staff to review golf course and tennis-center fees and to consider restoring a previously reduced percentage of the golf-course improvement fund.

Public comments: Dozens of members of the public and organized groups spoke at the hearing. Speakers urged preserving funding for the city’s golf course and tennis center, arguing those facilities generate revenue and serve thousands of residents; other commenters asked for more information before committing to long-term replenishment plans. FIPAC member Ralph Taboda urged the council to approve the waiver but postpone decisions about the repayment schedule until FY 2025–26 budget details are available.

Next steps: The adopted package defers $2.9 million in specified projects for FY 2024–25; staff was directed to return with a plan for reinstating deferred projects and with options for the FY 2025–26 budget. The council’s substitute motion carried 5–0.