STAFF REPORT
Meeting Date:
August 4, 2026
CONSENT
CALENDAR
17 SUBJECT: SOLE SOURCE PROFESSIONAL SERVICES AGREEMENT WITH CROSSBEAM
AI FOR A TWELVE-MONTH ARTIFICIAL INTELLIGENCE PILOT PROGRAM
FOR COMMUNITY DEVELOPMENT DEPARTMENT OPERATIONS
RECOMMENDATION: It is recommended that the City Council:
1. Authorize the City Manager to execute a sole source Professional Services Agreement with CrossBeam AI, in a form approved by the City Attorney, for a twelve-month pilot program to develop and implement artificial intelligence tools that support permit application screening, building and zoning plan review, customer service, and related Community Development Department operations, in an amount not to exceed $100,000.
2. Find that the recommended action is not a project subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378(b)(3).
SUMMARY OF THE MATTER
As part of the Fiscal Year 2026-27 budget process, the City Council Budget Ad Hoc Committee identified the evaluation of artificial intelligence (AI) technologies as an opportunity to improve operational efficiency, customer service, and permit processing within the Community Development Department. Over the past year, the Department evaluated multiple artificial intelligence platforms and determined that CrossBeam AI offers a collaborative development approach that allows the platform to be customized to the City's permitting processes, review standards, and workflows rather than requiring the City to adapt to a standardized software product.
Staff recommends approving a sole source Professional Services Agreement (PSA) with CrossBeam AI for a twelve-month pilot program in an amount not to exceed $99,600. The pilot will develop AI assisted tools for permit application screening, preliminary building and zoning plan review, and customer service, while maintaining City staff review and approval of all AI generated work products. The City's Information Technology Department has completed a cybersecurity review and determined that the platform satisfies the City's security requirements. Funding for the pilot is available within the Fiscal Year 2026-27 adopted budget, and no additional appropriation is required.
DISCUSSION
Over the past year, the Community Development Department has evaluated emerging artificial intelligence technologies with the potential to improve permit processing, customer service, operational efficiency, and consistency in development review. As part of that effort, staff researched and received demonstrations on numerous AI solutions entering the Community Development marketplace, including:
• Tyler Technologies' AI tools within the City's EnerGov permitting platform; • Archistar AI, which has assisted jurisdictions processing permits within the Palisades Fire burn scar area;
Sole Source Professional Services Agreement with Crossbeam AI for a 12-Month Artificial Intelligence Pilot Program For Community Development Operations August 4, 2026
• CrossBeam, and
Sole Source Professional Services Agreement with Crossbeam AI for a 12-Month Artificial Intelligence Pilot Program For Community Development Operations August 4, 2026
• Other commercially available AI plan review products.
While each platform offers promising capabilities, they are generally designed as standardized, off-theshelf software solutions with limited customization for individual agencies and generally require jurisdictions to adapt their business processes to the software rather than the reverse.
About Procurement. While the City’s Purchasing System Ordinance generally requires a competitive solicitation process for purchases of goods and services with an estimated cost greater than $10,000, it also includes certain exceptions to the competitive solicitation process when, for example, the City Council or City Manager determines that there is only one source that provides the needed materials and services, or to ensure compatibility with other city products and equipment. (Laguna Beach Municipal Code Sections
2.30.040(c) and 2.30.050(b).)
It further notes that sole source procurement may be necessary when the vendor holds a unique set of skills or expertise that makes it impossible/unlikely anyone else can do the work or the same quality of work. (LBMC Section 2.30.050(b)(5).) Staff believes a sole source procurement of Crossbeam satisfies this standard for several independent reasons. (See Attachment 1 [Sole Source Request Memorandum].) In short, CrossBeam is the exclusive developer of its proprietary artificial intelligence platform, which combines Anthropic's Claude large language model with software specifically designed for Community Development operations. Rather than offering a standardized product, CrossBeam is proposing a collaborative technology development partnership in which its founder and development team will work directly alongside Community Development staff throughout the pilot to develop, refine, and continuously improve functionality tailored to Laguna Beach's permitting processes, using the Department's existing review templates, correction letter formats, and its 300-item Residential Zoning Plan Review Checklist as the foundation upon which the platform is trained.
Because this collaboration depends upon CrossBeam's proprietary platform and the direct participation of its development team, staff believes no other vendor could reasonably provide an equivalent service, and that a competitive procurement process would likely yield only standardized commercial software rather than the collaborative development and founding client benefits proposed by CrossBeam, including direct access to its founder and developers, rapid software modifications, and priority technical support.
The proposed twelve-month pilot, detailed in the Scope of Work (Attachment 2), includes development of an AI-assisted application submittal screening tool, a building and zoning plan check module, a permit status and development information chatbot, and associated training and implementation support. The application screening tool is intended to automatically identify missing documents and deficiencies in online permit applications, a process that currently consumes approximately two to two and one-half hours of staff time per incomplete submittal.
The plan check module is intended to perform preliminary building and zoning review, verifying setbacks, development standards, and code consistency, while allowing professional staff to focus their expertise on Sole Source Professional Services Agreement with Crossbeam AI for a 12-Month Artificial Intelligence Pilot Program For Community Development Operations August 4, 2026
discretionary findings and complex planning analysis. The chatbot is intended to allow staff to quickly retrieve permit and project status information in response to routine customer inquiries.
The City's Information Technology Department recently completed a security review of the CrossBeam platform and determined that it satisfies the City's cybersecurity practices and protocols for integration with the City's network and information technology systems. This review provides assurance that the proposed pilot can be implemented in a manner consistent with the City's information security standards.
Every AI-generated review will continue to be evaluated by qualified City staff before comments are issued, ensuring that professional judgment remains central to every permitting decision.
FINANCIAL ANALYSIS
The proposed twelve-month pilot program with CrossBeam AI has a cost of $99,600. The City Council included $150,000 in the Community Development Department's Fiscal Year 2026-27 operating budget to evaluate and implement artificial intelligence technologies that improve operational efficiency and customer service. Sufficient funding is available within the adopted budget to support the proposed pilot program, and no additional budget appropriation is required.
ALIGNMENT WITH CITY COUNCIL GOALS AND PRIORITIES
This item supports the City Council's priorities related to organizational effectiveness and economic vitality by pursuing innovative technology intended to improve the efficiency, consistency, and customer service of the Community Development Department's permit processing and development review functions.
ENVIRONMENTAL ANALYSIS
The recommended action is not a "project" subject to the California Environmental Quality Act (CEQA) because it involves the approval of a sole source procurement and professional services agreement for software development and administrative technology services, and does not have the potential to cause either a direct or reasonably foreseeable indirect physical change in the environment. In addition, the recommended action is exempt pursuant to CEQA Guidelines Section 15061(b)(3), the Common Sense Exemption, because it can be seen with certainty that there is no possibility the action may have a significant effect on the environment. Here, the approval of the agreement will authorize administrative activities within the City, such as virtual permit plan checking services, and therefore falls within the exemption.
ATTACHMENTS
1. Sole Source Request Memorandum
2. Crossbeam Scope of Work
Submitted By: . Approved: .David A Kiff
Matthew Schneider, Director of
Community Development
Dave Kiff, City Manager
Sole Source Professional Services Agreement with Crossbeam AI for a 12-Month Artificial Intelligence Pilot Program For Community Development Operations August 4, 2026
Report Prepared By: Coordinated With:
Matthew Schneider, Director of Community
Development
Jane Abzug, Assistant City Attorney