Santa Monica City Council will consider declaring a state of fiscal distress today as the city grapples with massive legal settlements and ongoing budget deficits while simultaneously advancing ambitious climate and demographic policy initiatives.
The council is expected to adopt a resolution identifying ‘local fiscal distress based on decreased revenue and increased liabilities,’ citing the city's payment of over $229 million in sexual abuse settlements related to allegations against a former city employee from incidents that allegedly occurred 20 to 30 years ago.
The fiscal emergency declaration comes as the city faces additional claims from more than 180 claimants seeking several million dollars in damages related to the same former employee. The settlements have been funded largely through general fund reserves and by borrowing over $52 million from various city funds.
"The City has faced many fiscal challenges achieving its revenue, expenditures, and General Fund reserve targets during the past several years," according to city documents prepared by Acting City Attorney Heidi Von Tongeln. "The City's current financial situation has been exacerbated by uncertain revenues and increasing costs and liabilities."
The city's general fund reserves now stand at only 61% of pre-pandemic levels, following a 26.8% decline in revenue during fiscal year 2020-21. The city responded to the COVID-19 pandemic by cutting its budget by 23.9% and eliminating 299 permanent and 122 temporary positions.
The current fiscal year 2025-26 budget projects $484.3 million in expenditures against $473.5 million in expected revenue, creating a structural deficit the city anticipates will continue for several years.
Despite the fiscal challenges, the council will also consider two major policy initiatives that could significantly impact the city's future.
The council will vote on introducing a Building Performance Standards ordinance targeting existing buildings over 20,000 square feet — approximately 762 buildings across the city. The measure aims to reduce carbon emissions by up to 14.5% citywide by requiring these buildings to meet energy efficiency and greenhouse gas reduction targets every five years.
"Existing buildings make up most of the City's building stock and generate approximately 33% of total annual carbon emissions," according to Public Works Director Rick Valte. "Targeting this sector could cut building-related emissions by up to 44%."
The ordinance would establish a trajectory toward net-zero carbon emissions by 2050, with interim performance targets beginning in 2031 for buildings over 50,000 square feet and 2036 for smaller covered buildings.
Buildings would need to report annual energy use and meet targets through energy efficiency improvements, electrification upgrades, or alternative compliance pathways. The city plans to finalize specific performance targets and enforcement provisions through administrative regulations before the June 1, 2026 effective date.
The council will also approve a three-year Aging and Disability Action Plan addressing the needs of nearly 20% of residents who are over age 65. More than one-third of residents are age 55 or older, with disabilities affecting 42% of adults ages 75 and above.
The plan, funded by a California Department of Aging grant, was developed with input from a 16-member advisory committee and extensive community engagement. Nearly 70% of survey respondents rated Santa Monica as age- and disability-friendly, but identified pressing needs in housing stability, mobility, and access to information services.
"These local trends reflect statewide changes: by 2030, one in four Californians will be an older adult," according to Housing and Human Services Director Heather Averick.
The plan establishes five priority areas: improving mobility and public spaces, strengthening community connections, coordinating multilingual communication, expanding affordable housing, and enhancing emergency preparedness for vulnerable populations.
Implementation will begin in early 2026 with cross-departmental collaboration led by the Housing and Human Services Department. The city will use existing resources strategically while seeking additional internal and external funding.
The council will also ratify its ongoing homelessness emergency proclamation, which has been renewed every 60 days since February 2023. The declaration allows the city to access additional county, state and federal resources while streamlining certain city processes to address the regional homelessness crisis.
Additionally, the council will award a $1.1 million contract to Dudek for environmental impact report preparation related to upgrading the city's four water storage reservoirs and enhancing the Arcadia Water Treatment Plant.
The City Council meeting begins at 6:30 p.m. today at Santa Monica City Hall, with agenda items available for public review on the city's website.