Major Initiatives. The City is actively working on two of the largest capital projects in its history: the La Paz Road Mobility Enhancements and Permanent Repair project, and the Crown Valley Parkway Westbound Widening project. The estimated combined costs to complete these projects is over $31 million . The City continues to engage with Federal and State agencies to provide grant funding for those projects. Other significant projects being planned, designed, or constructed over the next several years include the Residential Annual Resurfacing Program, street improvements along Marina Hills Drive and several main thoroughfares, Residential Overlay Program, completion of playground replacements at various City parks, and capital improvements at the various parks and facilities throughout the City. The City has a dedicated page to the Capital Improvement Program that discusses each of these projects in more detail at: https://cityoflagunaniguel.org/810/Capital- Improvement-Program Reserve Policy. The City’s Financial Reserves Policy is reviewed on an annual basis for the purpose of providing fiscal stability and to ensure the long-term financial health of the City. It is the goal of both the City Council and management to maintain adequate reserve funds for known and unknown contingencies. The policy calls for maintaining a reserve for financial and economic uncertainty in an amount equal to no less than 50% of annual General Fund operating expenditures and a reserve for compensable accrued unused vacation and sick leave and other post-employment benefits. The total reserves at the end of the fiscal year were $53.3 million. The Policy allows the City Council to designate portions of the fund balance of the General Fund for future capital projects, continuing or carry-over appropriations, or any other municipal purpose that the City Council deems prudent or necessary. Total reserves applicable to those categories at the end of the fiscal year were $49.7 million, which represented 101.0% of actual General Fund expenditures for the year, far exceeding the 50% threshold. All fund balance classifications comply with the requirements of Governmental Accounting Standards Board (GASB) Statement No. 54 and are identified in Note 9 of the Notes to Financial Statements. Long-term Financial Planning. The City of Laguna Niguel adopted its first-ever strategic plan in 2020, which included a planning process to set goals and priorities for its future. Through the strategic planning process, the City created a blueprint for the future and developed a plan to accomplish its determined direction. The Strategic Plan defines current and future needs, established goals and strategies, and the City’s mission statement, vision statement, and guiding values. The City has accomplished a great deal in the first four years of the Strategic Plan, and with the City moving into year five of the plan, important updates were made to the strategies and timelines to reflect current priorities. A collaborative process was used to update the strategic plan. Throughout the process, a variety of stakeholders were involved, including City residents, business owners, Council Members, commissioners, committee members, department heads, and staff. The process included the preparation of an environmental scan, a strategic plan survey mailed to all residents, and a workshop to discuss the City’s goals for the future. The iii