CITY COUNCIL
MEETING
DECEMBER 16, 2025
PRESENTATIONS
Item #11
PH 25-049
Phenos
Hayward CUP
Hayward Police Department Year-End Report
1 Phenos
Hayward
Conditional Use Permit
Application No. UP
-
25 -
0011
City Council Meeting
December 16, 2025
Steve Kowalski, Senior Planner
Hayward Police Department Year-End Report
2 Background
• Fall 2017: Council adopts ordinance regulating commercial cannabis businesses • July 2018: Council grants Esther Lopez one of three Commercial Cannabis Business Permits to operate retail dispensary in the City
• March 2020: Council approves CUP application to operate dispensary at 1147 B Street • April 2025: Applicant files new CUP application to locate at former Walgreens site • September 2025: PC votes 5-1 (w/ one recusal) to recommend denial of CUP Project Details
• ±21,800 sq. ft. retail center containing martial arts studio, donut shop & dental office • Dispensary would occupy ±14,900 sq. ft. anchor space; retail floor area to be ±4,000 sq. ft. • 61 total shared parking spaces for all tenants
• Open 9:00 AM to 8:00 PM daily
• Minimum of three employees per shift, plus two professional security guards • NO delivery service provided & NO on-site consumption permitted Hayward Police Department Year-End Report
3 Primary Concerns Raised at Planning Commission Hearing • Inappropriate location next-door to martial arts studio where children train daily; minors may be enticed to enter dispensary
• Martial arts studio patrons & nearby residents may be exposed to undesirable nuisance activity (e.g., loitering, public consumption/intoxication, etc.) • Could be magnet for serious/dangerous crimes such as burglaries, armed robberies, etc.
• Will generate more traffic on already busy Foothill Boulevard corridor and worsen Foothill/Grove intersection congestion
• Insufficient parking on-site for dispensary customers and patrons of other businesses • Too close to another dispensary; will create cluster & convey negative image of area Hayward Police Department Year-End Report
4 Addressing Planning Commission Concerns
Inappropriate Location:
➢ Applicant team operates several dispensaries throughout California, all of which are designed to be inconspicuous
➢ Minimal signage & no exterior advertising of products offered Potential for Minors to Enter:
➢ All patrons required to provide government-issued ID at entrance ➢ Applicant team has never had an attempt by minor to enter/purchase products at any of its dispensaries
Potential for Clientele to Engage in Undesirable Activity:
➢ One security guard to regularly sweep exterior of premises to ensure no loitering or public consumption occurs
➢ No history of complaints regarding such activity at either Cookies or Garden of Eden ➢ Staff surveyed cities of San Leandro & Union City and neither experienced such problems at their dispensaries
Hayward Police Department Year-End Report
5 Addressing Planning Commission Concerns, continued
Possibility of Use Generating Serious Crimes:
➢ 5 total attempted robberies/burglaries at Cookies over past 2 years ➢ 1 robbery involving vehicle used as battering ram through entrance at Union City dispensary in past 5 years; subsequent installation of bollards across the storefront has since prevented such robberies
➢ Robust security plan to be implemented which features:
✓ Two professionally licensed & armed security guards on site during all business hours; will monitor premises to ensure no illegal activities occur and no minors enter ✓ 24-hour professionally monitored security alarm system ✓ Internet protocol, high-definition surveillance camera system covering entire interior and exterior of dispensary, including parking lots and walkways shared with adjacent businesses
✓ Industrial grade steel bollards to be installed across storefront entrance to prevent ram-style break-ins
✓ Commercial grade locks to be installed on all window & doors Hayward Police Department Year-End Report
6 Addressing Planning Commission Concerns, continued
Increased Traffic:
➢ According to latest Institute of Transportation Engineers Trip Generation Manual (standard used by all public agencies), dispensaries generate less trips than drugstores
Insufficient On-Site Parking:
➢ Proposed dispensary’s retail floor area is approximately 1/3 the size of former Walgreens store; as such, its parking requirement is significantly lower Two Dispensaries So Close Together Creates Cluster:
➢ Hayward Municipal Code requires minimum distance of 500 feet between dispensaries to prevent clustering; Garden of Eden is ±740 feet away (in unincorporated Alameda County); Cookies is ±1.5 miles away Hayward Police Department Year-End Report
7 Applicants’ Community Benefits Package & Outreach Efforts • One-time $20,000 contribution to Women and Men On The Way, non-profit organization providing support for adults suffering from various addictions • Additional charitable donations of up to $80,000 to other local non-profit organizations willing & able to accept monetary gifts
• Advance payment to City of $1 million of projected cannabis tax revenues from 1st year of operation
• Provided numerous letters of recommendations from various elected officials, city managers & police chiefs of cities where they operate dispensaries • Approached & obtained support of next-door martial arts studio owners and several of their members
Hayward Police Department Year-End Report
8 Additional Concerns Expressed Since Planning Commission Hearing • Concerns from other dispensary owners about “big-box chain” nature of dispensary and negative impacts it could have on smaller competitors • Concerns from other business owners along Foothill about negative image that two neighboring dispensaries could convey for City & surrounding area • Concerns about Co-Applicant Bert Sarkis’ past practices as business owner of some dispensaries in Central Valley (based on info found on social media) • Several more emails repeating previously-expressed concerns about traffic, undesirable behavior by customers, overconcentration and crime Hayward Police Department Year-End Report
9 Rationale for
Staff’s Approval
Recommendation
✓ Features robust & proven security plan which Hayward
Police Department has reviewed and approved
✓ Dispensary will be subject to annual renewal/inspection requirements of Commercial Cannabis Business Program
✓ CUP can be revoked if dispensary causes excessive
problems for Hayward Police Department or neighbors
✓ Also requires license from State Department of Cannabis Control which can be revoked
✓ Consistent w/ goals and policies contained in Land Use, Economic Development & Community Safety Elements
of Hayward 2040 General Plan
✓ Favorable Community Benefits package
STAFF
RECOMMENDATION:
That the City Council adopt the Draft Resolution in
Attachment II approving the Conditional Use Permit to
allow operation of the proposed retail dispensary as shown in Attachment IV, based on the draft findings and subject to the recommended conditions contained in the Resolution.
Item #12
WS 25-040
City Budget
Status Update
Hayward Police Department Year-End Report
Budget Update
Hayward City Council
December 16, 2025
Hayward Police Department Year-End Report
Activity Estimated Realized
Transfer/loan of funds from Measure C 9,750,000 9,750,000 One-time transfers in or reductions of transfers
out from other funds 1,900,000
Anticipated one-time revenue & recovery from
taxes and deposits 1,500,000
Increase to the Transient Occupancy Tax 250,000
Additional vacancies and overtime reductions 2,900,000
Reductions in services and supplies 3,000,000 3,000,000 End assignments for temporary employees 400,000
Remaining gap, to be covered through personnel-
related savings 6,747,495 3,000,000
Additional personnel-related savings due to
previously unbudgeted contractual COLA 1,086,900 1,086,900 TOTAL Activities 27,534,395 16,836,900
Hayward Police Department Year-End Report
Frequent Questions
Why can’t we spend down Measure C further?
• We need a cash contingency to manage cash flow, bond requirements, and for use in case of an emergency.
Why can't we borrow from the enterprise funds?
• This is not a sustainable solution. The City would be required to pay interest with a defined payment plan which only increases expenses to the general fund and does not resolve the longer-term structural issue.
Hayward Police Department Year-End Report
Why don’t we increase our revenue projections, especially for sales tax? • The City works with a sales tax consultant (Nuemo also known as MuniServices) • We have the first three months of data. Sales tax is up slightly from same period last year, but the September amount, which includes the County true up, showed a large decline:
• As part of November update, staff moved from consultant's "most likely" estimate to their “optimistic estimate”
• Nuemo does not recommend changing the forecast further and anticipate further declines, especially a reduction in Hayward’s share of the Council pool Sales Tax July Aug Sep (Q3) Total for the Quarter
FY25 3,838,905 3,508,871 5,220,265 12,568,041
FY26 4,227,334 4,732,347 3,622,053 12,581,734
Hayward Police Department Year-End Report
Why don't we have budget to actuals to share tonight?
• Staff is rebuilding the budget based on the November 18 Council presentation and the actions taken since. This will be completed in early January. At that time, the budget will be approved and accurate. • Starting in January, staff will present budget to actuals with the City Council on a regular basis and Department Heads will be running budget to actuals regularly and reviewing them with the City Manager • This item will be discussed further at the Council Budget and Finance Committee on 12/17/25
Hayward Police Department Year-End Report
Next Steps
December 17 Layoff notices issued
December 17 Council Budget & Finance Committee Meeting
• Status of Fiscal Year 26 budget activities
• Discuss February Update / Fiscal Sustainability Plan
• Discuss budget-to-actual reporting samples
January 6 Council Meeting: Work session to brainstorm ideas that Council wants included in the February meeting
January 20 Council meeting: Budget Update
February 3 Council Closed Session: Property Disposition February 28
(pending Council polling)
Saturday Council Budget Work Session: Budget update
and Fiscal Sustainability Plan
Hayward Police Department Year-End Report
Questions?
Item #13
LB 25-046
Temporary
Moratorium
1 Proposed Moratorium
on New Massage Businesses
Police Dept., Development Services Dept., City Attorney’s Office December 16, 2025
2 Existing Massage Regulations
• Zoning Ordinance
• Allowed by right in the Downtown core
• Conditional Use Permit (CUP) required in select other commercial districts
• Prohibited in all other parts of the City
• Massage Permit Ordinance
• Requires permit to operate massage business
• Establishes criteria for issuance, suspension and revocation of permits • Imposes specific operational criteria
3 Current Challenges
• Increase of Massage Establishments
• Since 2020, 7 new businesses have opened/ changed ownership in the City of Hayward
• 17 permitted massage establishments
• Illicit activity/ unpermitted premises
• 5 unpermitted massage establishments
• 10 permitted locations have complaints of illicit activity • Police Department Staffing
• 1 Vice Detective/ 1 Sgt assigned to Vice unit to regulate massage establishments/ investigate complaints
4 Proposed Solutions
• Phase 1: Temporary Moratorium
• State Law allows adoption of temporary moratorium on new uses to address public health, safety and welfare.
• 45-day initial term with extensions allowing up to 2-year total term. • Phase 2: Permanent Amendments (Anticipated Adoption Spring 2026) • Zoning Ordinance
• Require CUP for massage establishments in select zoning districts, including Downtown
• Prohibit massage establishments in all other zoning districts • Massage Ordinance
• Strengthen operational requirements
• Expand criteria for suspension or revocation of permits • Require a CUP for change of ownership of massage establishments 5 Staff Working Group
• Hayward Police Department – Vice Unit
• Sgt. Anthony Carrasco
• Det. Gabrielle Wright
• Development Services Department
• Elizabeth Blanton, Senior Planner
• City Attorney’s Office
• Michael Vigilia, Senior Assistant City Attorney
6 Item #14
LB 25-047
Mayor Pro Tempore
Election
1 MAYOR PRO TEMPORE
Tuesday, December 16, 2025
Miriam Lens, City Clerk
Mayor Pro Tempore Election: Adopt a Resolution Authorizing the Election of Mayor Pro Tempore of the City of Hayward for 2026
ITEM 14: LB 25
-
047
2 CITY CHARTER: Section 605
• Shall serve for a term of one year (January 1st to December 31st). • Shall have served at least two years on the Council prior to being elected. • Shall perform the duties of the Mayor during the Mayor’s absence.
MAYOR PRO TEMPORE
3 CURRENT MAYOR PRO TEMPORE: Council Member Roche
• January 1, 2025 to December 31, 2025
MAYOR PRO TEMPORE
ELIGIBLE MAYOR PRO TEMPORE: Council Member Syrop
• January 1, 2026 to December 31, 2026
4 2RECOMMENDATION
That Council:
1. Accepts public comment; and
2. Comments on the report; and
3. Adopts a resolution electing the Mayor Pro Tempore of the City of Hayward for 2026.
5