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City staff report council added contingency to community grants amid Valero revenue uncertainty
Summary
Director Dunleavy reported that council approved staff recommendations to fund most FY2026 community grants but directed a clause that would cancel FY2027 funding if city revenue falls by more than 10% following a potential Valero restructuring; council also asked staff to develop KPIs and require midyear reporting.
Director Dunleavy told the commission that city council accepted the commission’s recommendations to fund five of six community grant applicants for fiscal year 2026, but added budget contingency language for fiscal year 2027 tied to revenue projections following an announcement about Valero’s potential restructuring or cessation.
"Between our last meeting and the city council meeting, the announcement came of Valero's potential, restructuring or ceasing of operation," Dunleavy said, and she reported council direction that "if revenue falls by more than 10%, the second year of that grant program will not be funded." She added that grant agreements will be updated to include that clause and that staff will notify grantees about the 2026 awards and the potential for 2027 funding uncertainty so they can plan accordingly.
Commissioners and Mayor Young (as reported by staff) pressed for stronger accountability and measurement: council requested development of KPIs and suggested midyear reporting by grantees so the city can verify how funds are used and how many people programs serve. Commissioners debated whether the commission should take on audits or whether that responsibility should remain with staff; Director Dunleavy said staff time to follow up on incomplete reports has been significant and that a simplified, accountable reporting system would be developed and returned for discussion in July.
Commissioners noted that while the commission can propose priorities, formal allocation and any settlement or corporate-funding decisions (referencing potential Valero funds) would occur at the City Council level. The commission agreed to place metrics and reporting on a future agenda and to invite grantees for midyear review if required.
