FOCUSED PRIORITY AREA: Not Applicable.
Attachments
Proposed Ordinance
PGCC 1-21-26
ORDINANCE NO. 26-________
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PACIFIC GROVE
AMENDING THE CLASSIFICATION SCHEDULE FOR CODE COMPLIANCE
OFFICER
Findings
1. City Council approved the General Employees Association (GEA) 3% cost of living adjustment (COLA) for FY 25/26; and
2. Due to an administrative error, the Code Compliance Officer classification was not updated to reflect the COLA; and
3. The COLA is effective July 6, 2025 for GEA classifications; and
4. This ordinance corrects the salary schedule accordingly and retroactively for the Code Compliance Officer classification; and
5. Amendment to the classification plan must be adopted by the City Council pursuant to Charter Article 25 and Pacific Grove Municipal Code (PGMC) Section 4.20.280; and
6. In the enactment of this ordinance, the City followed the guidelines adopted by the State of California and published in the California Code of Regulations, Title 14, Section 15000, et seq. Enactment of this ordinance action does not constitute a “project” as defined by California Environmental Quality Act (CEQA) because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment pursuant Section 15378.
Ordinance
NOW, THEREFORE, THE COUNCIL OF THE CITY OF PACIFIC GROVE DOES ORDAIN AS FOLLOWS:
SECTION 1. The foregoing findings of the City Council are incorporated into this Ordinance as if set forth in full.
SECTION 2. The position classification plan approved and adopted by the City Council pursuant to Charter Article 15 and PGMC § 4.20.280 is amended for the Code Compliance Officer classification with the following salary schedule:
Step Step 1A Step 2B Step 3C Step 4D Step 5E Step 6F Step 7G Step 8H Hourly
Rate 36.62 38.46 40.38 42.40 44.52 45.63 46.77 47.94
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SECTION 3. The City Manager is directed to execute all documents and to perform all other necessary City acts to implement this Ordinance.
SECTION 4. In accord with Article 15 of the City Charter, this ordinance shall become effective on July 6, 2025.
PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF PACIFIC GROVE this day of February 2026, by the following vote:
AYES:
NOES:
ABSENT:
APPROVED:
________________________
NICK SMITH, Mayor
ATTEST:
_________________________________
SANDRA KANDELL, City Clerk
APPROVED AS TO FORM:
_________________________________
ALEX LORCA, City Attorney
PGCC 1-21-26
Agenda No. 11 B
CITY OF PACIFIC GROVE
300 Forest Avenue, Pacific Grove, California 93950
TO: Honorable Mayor and Members of the City Council
FROM: Lori McDonnell, Councilmember
MEETING DATE: January 21, 2026
SUBJECT: Proposed Ordinances (Regular and Urgency) Amending Chapter 11.72 (Aircraft Landing) And Adding Chapter 9.50 (Regulation Of Uncrewed Aircraft Systems) To The Municipal Code, Regulating Uncrewed Aircraft Systems (UAS) CEQA: Categorical Exemption, CEQA Guidelines Section 15301, Class I, Existing Facilities
RECOMMENDATION
Discuss proposed Ordinances Amending Chapter 11.72 (Aircraft Landing) And Adding Chapter
9.50 (Regulation Of Uncrewed Aircraft Systems) To The Municipal Code, Regulating Uncrewed Aircraft Systems (UAS).
1. 2. Request the City Attorney to read the title of the Regular Ordinance and the Urgency Ordinance
3. Motion to waive further reading of the ordinances.
Motion to introduce and hold first reading of an Ordinance Amending Chapter 11.72 (Aircraft Landing) And Adding Chapter 9.50 (Regulation Of Uncrewed Aircraft Systems) To The Municipal Code, Regulating Uncrewed Aircraft Systems (UAS).
4. Motion Adopt Urgency Ordinance Amending Chapter 11.72 (Aircraft Landing) And Adding Chapter 9.50 (Regulation Of Uncrewed Aircraft Systems) To The Municipal Code, Regulating Uncrewed Aircraft Systems (UAS).
5. Motion that publication of the ordinances will be satisfied by publication of a summary approved by the City Attorney.
6. DISCUSSION
On October 1, 2025, Councilmember Lori McDonnell presented an Agenda item requesting staff to return to the City Council with an ordinance regulating operation of Unmanned Aircraft Systems (UAS, aka drones). The Agenda Report for that item is Attachment 1 to this Agenda Report. The power point presentation for the October 1, 2025 Council meeting is Attachment 2 to this Agenda Report A proposed regular Ordinance Regulating Uncrewed Aircraft Systems (UAS) is Attachment 3 to this Agenda Report.
UAS, as aircraft, are subject to regulation by federal law and the Federal Aviation Administration (FAA). Federal law preempts local laws aimed at regulating aviation safety or airspace efficiency: laws that impair the reasonable use by drones of the airspace, and laws that conflict with FAA regulations are preempted.
PGCC 1-21-26
preempted.
However, local governments may regulate UAS under certain conditions. Examples of local laws that are not likely to be preempted include: (1) laws aimed at objectives other than aviation safety or airspace efficiency (e.g., protection of wildlife) that do not impair the reasonable use by drones of the airspace; (2) laws regulating the location of drone takeoff and landing areas; (3) laws that prohibit, restrict, or sanction operations by drones in the immediate reaches of property; (4) laws concerning where a drone operator can be located while conducting operations; and (5) drone registration requirements that do not regulate aviation safety or the efficient use of the airspace.
This ordinance amends Chapter 11.72 (Aircraft Landing) and creates a new Chapter 9.50, entitled “Regulation of Aircraft Systems” to limit and require a permit for the operation of UAS within the boundaries of the City.
The purpose of this ordinance is to prohibit the operation of Uncrewed Aircraft Systems (UAS) in the areas designated in this Ordinance, to protect the privacy of the residents and visitors of the City of Pacific Grove, and to protect wildlife and birds including but not limited to disturbing animals during breeding, nesting, rearing of young, or other critical life history functions.
Marine Protected Areas are identified in the Ordinance and include: Edward F. Ricketts State Marine Conservation Area, Lovers Point--Julia Platt State Marine Reserve, Pacific Grove Marine Gardens State Marine Conservation Area, Asilomar State Marine Reserve and Monterey Bay National Marine Sanctuary,
Recreational UAS operations are prohibited by the Ordinance except as expressly permitted by federal or state law and would also be subject to a City permit.
The following restrictions apply to all UAS operation unless expressly authorized by a permit condition.
A. No person shall launch, land, or operate UAS beyond the operator’s line of sight.
B. No person shall launch, land, or operate UAS in any park, playground, beach, coastline, or public recreation area.
C. No person shall launch, land, or operate UAS in, or within 300 feet of, those portions of the Marine Protected Areas which are within the City limits.
D. No person shall launch, land, or operate UAS in, or within 300 feet of, any wildlife or birds.
E. No person shall launch, land, or operate UAS within 50 feet of any person who is not the operator of the UAS.
F. No person shall launch, land, or operate UAS within 300 feet of any school property.
G. UAS are prohibited from collecting sound, still image, or video recordings of wildlife or birds.
H. UAS are prohibited from collecting sound, still image, or video recordings of private property, including the interior of any building, absent written permission from the property owner.
I. No person shall launch, land, or operate UAS during an emergency within 500 feet of any emergency vehicle or within 500 feet of the emergency.
J. No person shall launch, land, or operate UAS in any manner which violates any provision of Federal or State Law, including, without limitation, flight restrictions over the Monterey Bay National Marine Sanctuary (15 C.F.R. Pt. 922, Subpt. M, App. B).
The Permit requirements are listed in Section 9.50.070 of the Ordinance. Written approval by the Chief of Police is required for all permits.
The Ordinance does not prohibit or limit the authorized use of public UAS for law enforcement, fire services, or other official public agency purposes including investigations, emergency response, search PGCC 1-21-26
and rescue, or disaster mitigation. Such operations remain subject to FAA regulations and notification requirements.
The Ordinance does allow for commercial project permits and for educational and research project permits.
A violation of the City’s Code as codified by the this Ordinance is unlawful and declared a public nuisance and is may result in seizure and impound of the UAS and shall be punished as set forth in Title 1 of this code. Each and every day a violation is maintained, caused, aided, abetted, concealed, suffered, or permitted is a separate offense.
Urgency Ordinance
In addition to the regular Ordinance, there is also proposed an Urgency Ordinance which is Attachment
4. One of the reasons for the Urgency Ordinance is that the harbor seal "puppy" season starts in February according to the Marine Mammal Center "Your Guide to Seeing Harbor Seal pups in California" April 10, 2025 (linked here):
“When do harbor seals give birth?
Harbor seal pupping season varies widely across the regional populations. Seal pups are born progressively later in the year farther north along the Pacific coast, starting in February in Baja California and up until October in parts of Washington State. In California, depending on how far north or south you are, harbor seal pups are born between February and June.” Effective Date of Ordinances and Voting Requirements
If the Regular Ordinance is introduced on January 21, 2026 and adopted on February 4, 2026, then the Ordinance would become effective 30 days thereafter, which is March 6, 2026. The vote required on Regular Ordinance is a majority of the Council which would be four affirmative votes.
The Urgency Ordinance, if approved by a four-fifths vote of the City Council members, would take effect immediately. The City Council is comprised of seven members and four-fifths of seven is six. So for the Urgency Ordinance to be adopted, an affirmative vote of six is necessary.
California Environmental Quality Act
Enactment of this ordinance action does not constitute a “project” as defined by California Environmental Quality Act (CEQA) because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment, and, assuming arguendo that this ordinance is a “project” subject to CEQA, the ordinance is exempt from CEQA pursuant to the following categorical exemptions: Class 1 Existing Facilities exemption in CEQA Guidelines section 15301, because the ordinance entails operation and permitting of/within existing public areas and facilities; Class 4 Minor Alterations of Land exemption in CEQA Guidelines section 15304, because the ordinance addresses permits authorizing the temporary use of UAS which will not involve the removal of any trees and will have negligible or no permanent effects on the environment; Class 7 and Class 8 exemptions in CEQA Guidelines sections 15307 and 15308, because the primary purpose of the ordinance is to protect the City’s natural resources and environment (e.g., Marine Protected Areas and wildlife); and the common sense exemption in CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that there is no possibility that the ordinance may have a significant adverse effect on the environment.
OPTIONS
1. Take alternative action related to this subject
2. Take no action
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FINANCIAL IMPACT:
Costs associated with review of permit applications and enforcement of the City codes.
FOCUSED PRIORITY AREA: Environmental Stewardship
Attachments
1-Agenda Report for October 1, 2025 City Council Meeting 2-The power point presentation for the October 1, 2025 Council meeting 3- Proposed Regular Ordinance Amending Chapter 11.72
4-Proposed Urgency Ordinance Amending Chapter 11.72
PGCC 1-21-26
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City Council
City of Pacific Grove
13C. Proposal to Draft an
Ordinance to Regulate
Operation of Unmanned
Aircraft Systems (drones)
to Prevent Wildlife
Disturbances
October 1, 2025 [email protected] 1
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Ongoing wildlife disturbances observed
Rapid increase in UAS/drone flights
1 research flight in 2017 124 flights in 2022 (NOAA) ~2-3 recreational fights observed daily (winter 2022) Complaints from residents and tourists
October 1, 2025 [email protected] 2
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Drone flights prohibited without a permit
It is unlawful for any person to launch or land an aircraft, including a helicopter, drone, or other unmanned aircraft, without a permit. [Ord. 17-025 § 2, 2017; Ord. 1511 N.S. § 1, 1986]
No language indicating it is unlawful to disturb wildlife per multiple Federal Acts
E.g., Marine Mammal Protection Act, The Endangered Species Act, Migratory Bird Treaty Act, and Airborne Hunting Act
October 1, 2025 [email protected] 3
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Federal regulations prohibit disturbing wildlife
Defined as impacting wildlife behavior
“Failure to maintain a minimum altitude of 1,000 feet ...presumed to disturb marine mammals or seabirds.”
FAA Regulations - 5 miles around airport
Local Bans (MPAs, PB, Asilomar, State/National Parks) October 1, 2025 [email protected] 4
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Drones perceived as threat flushing from
beach or nest, chasing drone
Increased stress (lack of sleep, fight or flight)
“Death of a thousand cuts”
Can lead to abandonment or predation
October 1, 2025 [email protected] 5
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Report to Council in February 2023
Council Wildlife Subcommittee and Good City worked
with former police chief to develop wildlife
protections and enforcement, task not completed
Request for council feedback and direction to staff in support of completing drone portion of task
October 1, 2025 [email protected] 6
PGCC 1-21-26
Direct staff to return to City Council with an ordinance regulating operation of Unmanned Aircraft Systems (Drones) Ban recreational drone flights
Permits for research and limited commercial flights
Require wildlife education and wildlife monitors
Wildlife monitoring currently used for research flights Expand enforcement to encourage compliance
October 1, 2025 [email protected] 7
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City Council
City of Pacific Grove
Questions?
October 1, 2025 [email protected] 8
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BLOY chasing drone
October 1, 2025 [email protected] 9
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4904-9469-3255 v2
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PACIFIC GROVE AMENDING CHAPTER 11.72 (AIRCRAFT LANDING) AND ADDING CHAPTER 9.50 (REGULATION OF UNCREWED AIRCRAFT SYSTEMS) TO THE MUNICIPAL
CODE, REGULATING UNCREWED AIRCRAFT SYSTEMS (UAS)
FACTS
1. The City of Pacific Grove regulates the landing and launching of aircraft, including Uncrewed Aircraft Systems (UAS), commonly known as drones, within the City in Chapter 11.72 of the Pacific Grove Municipal Code.
2. UAS, as aircraft, are subject to regulation by federal law and the Federal Aviation Administration (FAA). Federal law preempts local laws aimed at regulating aviation safety or airspace efficiency, laws that impair the reasonable use by drones of the airspace, and laws that conflict with FAA regulations are preempted.
3. However, local governments may regulate UAS under certain conditions. Examples of local laws that are not likely to be preempted include: (1) laws aimed at objectives other than aviation safety or airspace efficiency (e.g., protection of wildlife) that do not impair the reasonable use by drones of the airspace; (2) laws regulating the location of drone takeoff and landing areas; (3) laws that prohibit, restrict, or sanction operations by drones in the immediate reaches of property; (4) laws concerning where a drone operator can be located while conducting operations; and (5) drone registration requirements that do not regulate aviation safety or the efficient use of the airspace.
4. The City has determined that in light of the increased use of UAS, which frequently fly very close to wildlife, and which can intrude on people’s privacy, it is appropriate to impose restrictions on the use of UAS within the boundaries of the City to protect the privacy of the residents and visitors of the City of Pacific Grove, and to protect wildlife and birds including, but not limited to disturbing animals during breeding, nesting, rearing of young, or other critical life history functions.
5. This ordinance amends Chapter 11.72 (Aircraft Landing) and creates a new Chapter 9.50, entitled “Regulation of Aircraft Systems” to limit and require a permit for the operation of UAS within the boundaries of the City.
6. In the enactment of this ordinance, the City followed the guidelines adopted by the State of California and published in the California Code of Regulations, Title 14, Section 15000, et seq.
7. Enactment of this ordinance action does not constitute a “project” as defined by California Environmental Quality Act (CEQA) because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment, and, assuming arguendo that this ordinance is a “project” subject to CEQA, the ordinance is exempt from CEQA pursuant to the following categorical exemptions:
Class 1 Existing Facilities exemption in CEQA Guidelines section 15301, because the PGCC 1-21-26
4904-9469-3255 v2
ordinance entails operation and permitting of/within existing public areas and facilities; Class 4 Minor Alterations of Land exemption in CEQA Guidelines section 15304, because the ordinance addresses permits authorizing the temporary use of UAS which will not involve the removal of any trees and will have negligible or no permanent effects on the environment; Class 7 and Class 8 exemptions in CEQA Guidelines sections 15307 and 15308, because the primary purpose of the ordinance is to protect the City’s natural resources and environment (e.g., Marine Protected Areas and wildlife); and the common sense exemption in CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that there is no possibility that the ordinance may have a significant adverse effect on the environment
NOW, THEREFORE, THE COUNCIL OF THE CITY OF PACIFIC GROVE DOES ORDAIN AS FOLLOWS:
SECTION 1. The foregoing Facts are adopted as findings of the City Council as though set forth in fully within the body of this ordinance.
SECTION 2. A new chapter 9.50 shall be added entitled “Regulation of Uncrewed Aircraft Systems” shall be created, as follows:
Chapter 9.50 Regulation of Uncrewed Aircraft Systems
Section 9.50.010 Purpose.
The purpose of this ordinance is to prohibit the operation of Uncrewed Aircraft Systems (UAS) in the areas designated in this Ordinance, to protect the privacy of the residents and visitors of the City of Pacific Grove, and to protect wildlife and birds including, but not limited to disturbing animals during breeding, nesting, rearing of young, or other critical life history functions.
Section 9.50.020 Definitions.
For the purposes of this chapter, the following definitions apply:
“City Manager” means the City’s City Manager or their designee. “Chief of Police” means the Chief of the Pacific Grove Police Department, or their designee. “Marine Protected Area” or “MPA” means a named, discrete, geographically defined area of the ocean seaward of the high tide line, including any area of intertidal or subtidal terrain, together with its overlying water and associated flora and fauna, which has been designated and managed for the long-term to protect or conserve marine resources and ecosystems. MPAs aim to protect biodiversity, habitats, and cultural heritage by limiting or regulating human activities. The entire coastline of the City of Pacific Grove adjoins four State MPAs and one Federal MPA.
The State MPAS are defined by Title 14 of the California Code of Regulations, Section 632(a), and include the following:
Edward F. Ricketts State Marine Conservation Area (14 CCR § 632(b)(75) and found here). This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 36.508′ N. lat. 121° 53.379′ W. long.; 36°
37.250′ N. lat. 121° 53.780′ W. long.; and 36° 37.100′ N. lat. 121° 54.093′ W. long.
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4904-9469-3255 v2
Lovers Point--Julia Platt State Marine Reserve (14 CCR § 632(b)(76) and found here).
This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 37.100′ N. lat. 121° 54.093′ W. long.; 36°
37.250′ N. lat. 121° 53.780′ W. long.; 36° 37.380′ N. lat. 121° 53.850′ W. long.; 36°
37.600′ N. lat. 121° 54.750′ W. long.; and 36° 37.600′ N. lat. 121° 54.919′ W. long.
Pacific Grove Marine Gardens State Marine Conservation Area (14 CCR § 632(b)(77) and found here). This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 37.600′ N. lat. 121° 54.919′ W. long.; 36° 37.600′ N. lat. 121° 54.750′ W. long.; 36° 38.700′ N. lat. 121° 55.400′ W. long.; 36° 38.900′ N. lat. 121° 56.600′ W. long.; 36° 38.314′ N. lat. 121° 56.292′ W. long.; and 36° 38.226′ N. lat. 121° 56.159′ W. long.
Asilomar State Marine Reserve (14 CCR § 632(b)(78) and found here). This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 38.226′ N. lat. 121° 56.159′ W. long.; 36° 38.314′ N. lat. 121°
56.292′ W. long.; 36° 38.900′ N. lat. 121° 56.600′ W. long.; and 36° 36.554′ N. lat. 121° 57.518′ W. long.
The Federal MPA is the Monterey Bay National Marine Sanctuary, as defined by Title 15 of the Code of Federal Regulations, Part 922, Subpart M, Appendices A, F (and found here).
“Operate” shall mean use and control, and includes flying over.. “Person” means any individual or entity of any kind.
“School” means any institution where instruction is given to children under 18, and includes, without limitation, any preschool, kindergarten, or K-12. “Uncrewed Aircraft System” or “UAS” means any device that flies, whether remotely piloted or autonomous, which includes devices commonly known as drones or model aircrafts, that operates without a pilot onboard, and associated elements, including communication links and control equipment.
“Commercial UAS” means UAS operated by any person for commercial purposes or in furtherance of, or incidental to, any business or media service or agency. “Educational UAS” means UAS in use by any school or educational, nonprofit, or governmental institution for educational purposes.
“Public UAS” means UAS operated by any public agency for government related purposes.
“Recreational UAS” means UAS operated by any person for hobby or recreational purposes, or which does not qualify as a Commercial, Public, or Research UAS. “Research UAS” means UAS operated by a public agency or nonprofit organization for research purposes only. Research purposes means that the UAS is being operated in conjunction with a public agency, university, or recognized organization for the purposes of, without limitation, environmental monitoring and mapping, agriculture and biology monitoring, assessment of hazardous conditions and disaster response, geophysics and remote sensing, or engineering and aerospace. Research UAS may include Educational UAS.
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Section 9.50.030 Recreational UAS Prohibited.
No person shall launch, land, or operate UAS for hobby or recreational purposes anywhere in the City except when such operation is expressly authorized by federal and/or state law. Any person who wants to operate an UAS expressly permitted by federal or state law must also obtain a City permit pursuant to Section 9.50.070.
Section 9.50.040 UAS Permit Requirement.
A. Any UAS operation within the city or MPA requires a permit issued by the city’s Police Department, in accordance with section 9.50.070, below.
B. Permits may include conditions to mitigate environmental impacts, protect wildlife, and ensure public safety, including the requirement to use a wildlife monitor during UAS operations. UAS operated for research purposes may be exempted from the restrictions related to wildlife and birds
C. All UAS operators must, in addition to a City permit, have a current and valid Part 107 Remote Pilot Certificate, issued by the Federal Aviation Administration (FAA), and provide evidence of FAA tower notification if operating within 5 nautical miles of Monterey Regional Airport.
Section 9.50.050 Operation of Public UAS.
Nothing in this ordinance prohibits or limits the authorized use of public UAS for law enforcement, fire services, or other official public agency purposes including investigations, emergency response, search and rescue, or disaster mitigation. Such operations remain subject to FAA regulations and notification requirements.
Section 9.50.060 Prohibited UAS Operations.
The following restrictions apply to all UAS operation unless expressly authorized by a permit condition.
A. No person shall launch, land, or operate UAS beyond the operator’s line of sight.
B. No person shall launch, land, or operate UAS in any park, playground, beach, coastline, or public recreation area.
C. No person shall launch, land, or operate UAS in, or within 300 feet of, those portions of the Marine Protected Areas which are within the City limits.
D. No person shall launch, land, or operate UAS in, or within 300 feet of, any wildlife or birds.
E. No person shall launch, land, or operate UAS within 50 feet of any person who is not the operator of the UAS.
F. No person shall launch, land, or operate UAS within 300 feet of any school property.
G. UAS are prohibited from collecting sound, still image, or video recordings of wildlife or birds.
H. UAS are prohibited from collecting sound, still image, or video recordings of private property, including the interior of any building, absent written permission from the property owner.
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I. No person shall launch, land, or operate UAS during an emergency within 500 feet of any emergency vehicle or within 500 feet of the emergency.
J. No person shall launch, land, or operate UAS in any manner which violates any provision of Federal or State Law, including, without limitation, flight restrictions over the Monterey Bay National Marine Sanctuary (15 C.F.R. Pt. 922, Subpt. M, App. B).
Section 9.50.070 Permit Requirements; Project Permits.
A. Permit applications must be submitted no later than three (3) business days prior to the desired operation date.
B. Permits shall include:
1. Conditions to mitigate environmental impacts, protect wildlife, and ensure public safety, including the requirement to use a wildlife monitor during UAS operations. The wildlife monitor will be assigned by the City and the cost of the monitor will be borne by the permit holder.
2. A deposit will be required to cover the likely cost of the wildlife monitor, and the actual cost will be drawn down from the deposit.
3. Written approval by the Chief of Police will be required for all permits.
C. Applications. An application for a UAS operating permit shall be on a form provided by the Chief of Police and must include:
1. Name and phone number of the person(s) who will be operating the UAS.
2. Make, model, and serial or N-number for each UAS to be permitted.
3. A description of each proposed flight activity, including whether filming, taking of visual images and/or sound recording will occur.
4. Copy of a valid and current Part 107 Remote Pilot Certificate and FAA tower notification, if applicable.
5. A signed statement certifying that the applicant knows how to operate UAS and is aware of and agrees to operate it in full compliance with its operating instructions and with the provisions of this chapter and any other federal or state laws governing its operations.
6. A signed statement acknowledging that only the applicant may operate UAS under the permit.
7. A signed statement that the operator will land, launch, and operate UAS only within line of sight;
8. A signed indemnification clause protecting the City from third party claim liability.
9. Payment of an application filing fee in an amount as set forth in the City’s fee resolution.
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10 Proof of minimum liability insurance in the amount of $1,000,000 per incident and $2,000,000 million in the aggregate, adding the City as additional insured, and including certificates and endorsements demonstrating such coverage.
11. Any supplemental information or documentation deemed necessary by the Chief of Police.
D. Project Permits.
Under certain circumstances, a project or program permit will be more appropriate than a simple permit. A project permit is intended for projects such as operation pursuant to a film permit, research, or area realtors who use drone footage for marketing purposes, as well as educational or research projects. The project permit will include the scope of the project as any applicable conditions.
1. For commercial project permits, the permit application shall include, in addition to the above, the make, model, and serial or N-number of each UAS; the proposed duration of the project; the proposed flight activities and/or flight paths; written permission from private property owners, if applicable; and any other information deemed relevant by the Chief of Police.
2. For educational and research project permits, the permit application shall include the make, model, and serial or N-number of each UAS; the proposed duration of the project; the names and qualifications of the researchers/pilots; the project location (e.g., Hopkins Marine Station property and surrounding waters), and a list of projects that would include multiple flights and locations to determine the appropriate wildlife monitoring (e.g., based on location and time of year); and any other information deemed relevant by the Chief of Police. These permits can be amended by submitting and change in or additional information to the Chief of Police to ensure that adequate wildlife monitoring will be provided.
E. Issuance, Renewal, or Amendment. The permit will include a copy of the operating rules set forth in this chapter. Permits will be issued for a period of one year and may be renewed annually upon filing of a renewal application and payment of a renewal fee as set forth in the City’s master fee resolution. Renewal applications must include any changes in information, such as a change of address, or changes in UAS being permitted. Any change in UAS under a permit while the permit is active requires an amendment to the permit.
F. Assignment. The permit is not assignable. No person other than the individuals identified in the permit may operate the UAS within the City.
Section 9.50.080 Denial; Grounds for Suspension, Revocation, and Renewal.
A. Denial. After the completion of the application review, the Chief of Police may deny the issuance an operating permit if the requirements of this chapter have not been satisfied, including if the applicant failed to submit a complete application or failed to pay the requisite application fee. The Chief of Police will notify an applicant of their decision in writing. An applicant whose permit is denied may resubmit the application to correct any defects, or may appeal the denial in accordance with the procedures set forth in this chapter. The decision on the application is final if no written appeal is timely submitted to and received by the City Clerk.
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B. Grounds for Suspension, Revocation, or Nonrenewal. The Chief of Police may suspend, revoke, or deny a permit for renewal if the Chief of Police finds that the requirements of this chapter have not been satisfied or the permittee has violated any provision of this chapter.
The permittee must be notified of the decision in writing. The permittee may appeal the Chief of Police’s decision denying a renewal application, or suspending, or revoking a permit, in accordance with the procedures set forth in this chapter. The decision is final if no written appeal is timely submitted to and received by the City Clerk. If the Chief of Police revokes a permit, a new application may not be submitted for a period of one year.
Section 9.50.090 Appeals.
A. Any appeal right provided for in this chapter must be conducted as set forth in this section. An applicant or permittee may appeal the decision of the Chief of Police suspending, revoking, or denying an operating permit by filing with the City Clerk a written notice of appeal within fifteen calendar days from the date of service of the notice.
B. Except as modified in this subsection, all appeals under this section must be noticed, scheduled, heard, and decided in accordance with the administrative citation appeal procedures set forth in Chapter 1.17. In any appeal of a suspension, revocation, denial, or nonrenewal, the issues are limited to whether, under this chapter, the facts establish grounds for the Chief of Police’s decision.
C. The appeal decision is final and not subject to any further administrative review or appeal. It is the City’s final administrative decision for purposes of judicial review.
Section 9.50.100 Violations and Penalties.
A. It is unlawful and declared a public nuisance for any person to violate any provision of this chapter.
B. Violation of this chapter may result in seizure and impound of the UAS and shall be punished as set forth in Title 1 of this code.
C. Each and every day a violation is maintained, caused, aided, abetted, concealed, suffered, or permitted is a separate offense.
SECTION 3. Existing Municipal Code chapter 11.72, entitled “Aircraft Landing” shall be amended by the deletion of all text shown in strikeout text (strikeout text) and by the addition of all text shown in bold, italic text (bold italic text), as follows:
Chapter 11.72 (Aircraft Landing)
11.72.010 Launch or landing prohibited.
It is unlawful for any person to launch or land an aircraft, including a helicopter, drone (“Uncrewed Aircraft System”), or other unmanned aircraft, without a permit.
11.72.020 Exceptions.
This chapter shall not apply if the following exceptions exist:
(a) A permit is issued for an Uncrewed Aircraft System by the city managerchief of police, or their designee, pursuant to Chapter 9.50;
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(b) The landing of an emergency aircraft is authorized by the chief of police, or their designee.
SECTION 4. The City Manager is directed to execute all documents and to perform all other necessary City acts to implement this Ordinance.
SECTION 5. Severability. If any provision, section, paragraph, sentence, clause or phrase of this ordinance, or any part thereof, or the application thereof to any person or circumstance is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance, or any part thereof, or its application to other persons or circumstances. The City Council hereby declares that it would have passed and adopted each provision, section, paragraph, subparagraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, paragraphs, subparagraphs, sentences, clauses or phrases, or the application thereof to any person or circumstance, be declared invalid or unconstitutional.
SECTION 6. In accord with Article 15 of the City Charter, this ordinance shall become effective on the thirtieth (30th) day following its passage and adoption.
PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF PACIFIC GROVE this _________ day of _________, 2026, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
APPROVED:
_______________________________
NICK SMITH, Mayor
ATTEST:
DATED:_______________________
_______________________________
SANDRA KANDELL, City Clerk
APPROVED AS TO FORM:
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_______________________________
Alex Lorca, City Attorney
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AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PACIFIC GROVE AMENDING CHAPTER 11.72 (AIRCRAFT LANDING) AND ADDING CHAPTER 9.50 (REGULATION OF UNCREWED AIRCRAFT SYSTEMS) TO THE
MUNICIPAL CODE, REGULATING UNCREWED AIRCRAFT SYSTEMS (UAS) FACTS
1. The City of Pacific Grove regulates the landing and launching of aircraft, including Uncrewed Aircraft Systems (UAS), commonly known as drones, within the City in Chapter 11.72 of the Pacific Grove Municipal Code.
2. UAS, as aircraft, are subject to regulation by federal law and the Federal Aviation Administration (FAA). Federal law preempts local laws aimed at regulating aviation safety or airspace efficiency, laws that impair the reasonable use by drones of the airspace, and laws that conflict with FAA regulations are preempted.
3. However, local governments may regulate UAS under certain conditions. Examples of local laws that are not likely to be preempted include: (1) laws aimed at objectives other than aviation safety or airspace efficiency (e.g., protection of wildlife) that do not impair the reasonable use by drones of the airspace; (2) laws regulating the location of drone takeoff and landing areas; (3) laws that prohibit, restrict, or sanction operations by drones in the immediate reaches of property; (4) laws concerning where a drone operator can be located while conducting operations; and (5) drone registration requirements that do not regulate aviation safety or the efficient use of the airspace.
4. The City has determined that in light of the increased use of UAS, which frequently fly very close to wildlife, and which can intrude on people’s privacy, it is appropriate to impose restrictions on the use of UAS within the boundaries of the City to protect the privacy of the residents and visitors of the City of Pacific Grove, and to protect wildlife and birds including, but not limited to disturbing animals during breeding, nesting, rearing of young, or other critical life history functions.
5. This Urgency Ordinance amends Chapter 11.72 (Aircraft Landing) and creates a new Chapter 9.50, entitled “Regulation of Aircraft Systems” to limit and require a permit for the operation of UAS within the boundaries of the City.
6. Harbor seal “puppy” season starts in February according to the Marine Mammal Center’s Your Guide to Seeing Harbor Seal Pups in California, April 10, 2025: “Harbor seal pupping season varies widely across the regional populations. Seal pups are born progressively later in the year farther north along the Pacific coast, starting in February in Baja California and up until October in parts of Washington State. In California, depending on how far north or south you are, harbor seal pups are born between February and June.” (Found here: https://www.marinemammalcenter.org/news/your-guide-toseeing-harbor-seal-pups-incalifornia#:~:text=In%20California%2C%20depending%20on%20how,born%20between %20February%20and%20June.&text=Harbor%20seal%20pups%20depend%20on,the%2 PGCC 1-21-26
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0pup%20to%20grow%20strong). Based on this timeline, it is critical to adopt this Urgency Ordinance as soon as possible to ensure that the Harbor seals’ puppy season is not disturbed by UAS.
7. Because of the findings set forth above, the City Council finds that this Urgency Ordinance should be adopted on an urgency basis to preserve the public health, safety, and welfare in accordance with Government Code §§ 36934 and 36937(b).
8. In the enactment of this Urgency Ordinance, the City followed the guidelines adopted by the State of California and published in the California Code of Regulations, Title 14, Section 15000, et seq.
9. Enactment of this Urgency Ordinance action does not constitute a “project” as defined by California Environmental Quality Act (CEQA) because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment, and, assuming arguendo that this Urgency Ordinance is a “project” subject to CEQA, the Urgency Ordinance is exempt from CEQA pursuant to the following categorical exemptions: Class 1 Existing Facilities exemption in CEQA Guidelines section 15301, because the Urgency Ordinance entails operation and permitting of/within existing public areas and facilities; Class 4 Minor Alterations of Land exemption in CEQA Guidelines section 15304, because the Urgency Ordinance addresses permits authorizing the temporary use of UAS which will not involve the removal of any trees and will have negligible or no permanent effects on the environment; Class 7 and Class 8 exemptions in CEQA Guidelines sections 15307 and 15308, because the primary purpose of the Urgency Ordinance is to protect the City’s natural resources and environment (e.g., Marine Protected Areas and wildlife); and the common sense exemption in CEQA Guidelines section 15061(b)(3), because it can be seen with certainty that there is no possibility that the Urgency Ordinance may have a significant adverse effect on the environment
NOW, THEREFORE, THE COUNCIL OF THE CITY OF PACIFIC GROVE DOES ORDAIN AS FOLLOWS:
SECTION 1. The foregoing Facts are adopted as findings of the City Council as though set forth in fully within the body of this Urgency Ordinance.
SECTION 2. A new chapter 9.50 shall be added entitled “Regulation of Uncrewed Aircraft Systems” shall be created, as follows:
Chapter 9.50 Regulation of Uncrewed Aircraft Systems
Section 9.50.010 Purpose.
The purpose of this ordinance is to prohibit the operation of Uncrewed Aircraft Systems (UAS) in the areas designated in this Ordinance, to protect the privacy of the residents and visitors of the City of Pacific Grove, and to protect wildlife and birds including, but not limited to disturbing animals during breeding, nesting, rearing of young, or other critical life history functions.
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Section 9.50.020 Definitions.
For the purposes of this chapter, the following definitions apply:
“City Manager” means the City’s City Manager or their designee. “Chief of Police” means the Chief of the Pacific Grove Police Department, or their designee. “Marine Protected Area” or “MPA” means a named, discrete, geographically defined area of the ocean seaward of the high tide line, including any area of intertidal or subtidal terrain, together with its overlying water and associated flora and fauna, which has been designated and managed for the long-term to protect or conserve marine resources and ecosystems. MPAs aim to protect biodiversity, habitats, and cultural heritage by limiting or regulating human activities. The entire coastline of the City of Pacific Grove adjoins four State MPAs and one Federal MPA.
The State MPAS are defined by Title 14 of the California Code of Regulations, Section 632(a), and include the following:
Edward F. Ricketts State Marine Conservation Area (14 CCR § 632(b)(75) and found here). This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 36.508′ N. lat. 121° 53.379′ W. long.; 36°
37.250′ N. lat. 121° 53.780′ W. long.; and 36° 37.100′ N. lat. 121° 54.093′ W. long.
Lovers Point--Julia Platt State Marine Reserve (14 CCR § 632(b)(76) and found here).
This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 37.100′ N. lat. 121° 54.093′ W. long.; 36°
37.250′ N. lat. 121° 53.780′ W. long.; 36° 37.380′ N. lat. 121° 53.850′ W. long.; 36°
37.600′ N. lat. 121° 54.750′ W. long.; and 36° 37.600′ N. lat. 121° 54.919′ W. long.
Pacific Grove Marine Gardens State Marine Conservation Area (14 CCR § 632(b)(77) and found here). This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 37.600′ N. lat. 121° 54.919′ W. long.; 36° 37.600′ N. lat. 121° 54.750′ W. long.; 36° 38.700′ N. lat. 121° 55.400′ W. long.; 36° 38.900′ N. lat. 121° 56.600′ W. long.; 36° 38.314′ N. lat. 121° 56.292′ W. long.; and 36° 38.226′ N. lat. 121° 56.159′ W. long.
Asilomar State Marine Reserve (14 CCR § 632(b)(78) and found here). This area is bounded by the mean high tide line and straight lines connecting the following points in the order listed: 36° 38.226′ N. lat. 121° 56.159′ W. long.; 36° 38.314′ N. lat. 121°
56.292′ W. long.; 36° 38.900′ N. lat. 121° 56.600′ W. long.; and 36° 36.554′ N. lat. 121° 57.518′ W. long.
The Federal MPA is the Monterey Bay National Marine Sanctuary, as defined by Title 15 of the Code of Federal Regulations, Part 922, Subpart M, Appendices A, F (and found here).
“Operate” shall mean use and control, and includes flying over.. “Person” means any individual or entity of any kind.
“School” means any institution where instruction is given to children under 18, and includes, without limitation, any preschool, kindergarten, or K-12. “Uncrewed Aircraft System” or “UAS” means any device that flies, whether remotely piloted or autonomous, which includes devices commonly known as drones or model aircrafts, that PGCC 1-21-26
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operates without a pilot onboard, and associated elements, including communication links and control equipment.
“Commercial UAS” means UAS operated by any person for commercial purposes or in furtherance of, or incidental to, any business or media service or agency. “Educational UAS” means UAS in use by any school or educational, nonprofit, or governmental institution for educational purposes.
“Public UAS” means UAS operated by any public agency for government related purposes.
“Recreational UAS” means UAS operated by any person for hobby or recreational purposes, or which does not qualify as a Commercial, Public, or Research UAS. “Research UAS” means UAS operated by a public agency or nonprofit organization for research purposes only. Research purposes means that the UAS is being operated in conjunction with a public agency, university, or recognized organization for the purposes of, without limitation, environmental monitoring and mapping, agriculture and biology monitoring, assessment of hazardous conditions and disaster response, geophysics and remote sensing, or engineering and aerospace. Research UAS may include Educational UAS.
Section 9.50.030 Recreational UAS Prohibited.
No person shall launch, land, or operate UAS for hobby or recreational purposes anywhere in the City except when such operation is expressly authorized by federal and/or state law. Any person who wants to operate an UAS expressly permitted by federal or state law must also obtain a City permit pursuant to Section 9.50.070.
Section 9.50.040 UAS Permit Requirement.
A. Any UAS operation within the city or MPA requires a permit issued by the city’s Police Department, in accordance with section 9.50.070, below.
B. Permits may include conditions to mitigate environmental impacts, protect wildlife, and ensure public safety, including the requirement to use a wildlife monitor during UAS operations. UAS operated for research purposes may be exempted from the restrictions related to wildlife and birds
C. All UAS operators must, in addition to a City permit, have a current and valid Part 107 Remote Pilot Certificate, issued by the Federal Aviation Administration (FAA), and provide evidence of FAA tower notification if operating within 5 nautical miles of Monterey Regional Airport.
Section 9.50.050 Operation of Public UAS.
Nothing in this ordinance prohibits or limits the authorized use of public UAS for law enforcement, fire services, or other official public agency purposes including investigations, emergency response, search and rescue, or disaster mitigation. Such operations remain subject to FAA regulations and notification requirements.
Section 9.50.060 Prohibited UAS Operations.
The following restrictions apply to all UAS operation unless expressly authorized by a permit condition.
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A. No person shall launch, land, or operate UAS beyond the operator’s line of sight.
B. No person shall launch, land, or operate UAS in any park, playground, beach, coastline, or public recreation area.
C. No person shall launch, land, or operate UAS in, or within 300 feet of, those portions of the Marine Protected Areas which are within the City limits.
D. No person shall launch, land, or operate UAS in, or within 300 feet of, any wildlife or birds.
E. No person shall launch, land, or operate UAS within 50 feet of any person who is not the operator of the UAS.
F. No person shall launch, land, or operate UAS within 300 feet of any school property.
G. UAS are prohibited from collecting sound, still image, or video recordings of wildlife or birds.
H. UAS are prohibited from collecting sound, still image, or video recordings of private property, including the interior of any building, absent written permission from the property owner.
I. No person shall launch, land, or operate UAS during an emergency within 500 feet of any emergency vehicle or within 500 feet of the emergency.
J. No person shall launch, land, or operate UAS in any manner which violates any provision of Federal or State Law, including, without limitation, flight restrictions over the Monterey Bay National Marine Sanctuary (15 C.F.R. Pt. 922, Subpt. M, App. B).
Section 9.50.070 Permit Requirements; Project Permits.
A. Permit applications must be submitted no later than three (3) business days prior to the desired operation date.
B. Permits shall include:
1. Conditions to mitigate environmental impacts, protect wildlife, and ensure public safety, including the requirement to use a wildlife monitor during UAS operations. The wildlife monitor will be assigned by the City and the cost of the monitor will be borne by the permit holder.
2. A deposit will be required to cover the likely cost of the wildlife monitor, and the actual cost will be drawn down from the deposit.
3. Written approval by the Chief of Police will be required for all permits.
C. Applications. An application for a UAS operating permit shall be on a form provided by the Chief of Police and must include:
1. Name and phone number of the person(s) who will be operating the UAS.
2. Make, model, and serial or N-number for each UAS to be permitted.
3. A description of each proposed flight activity, including whether filming, taking of visual images and/or sound recording will occur.
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4. Copy of a valid and current Part 107 Remote Pilot Certificate and FAA tower notification, if applicable.
5. A signed statement certifying that the applicant knows how to operate UAS and is aware of and agrees to operate it in full compliance with its operating instructions and with the provisions of this chapter and any other federal or state laws governing its operations.
6. A signed statement acknowledging that only the applicant may operate UAS under the permit.
7. A signed statement that the operator will land, launch, and operate UAS only within line of sight;
8. A signed indemnification clause protecting the City from third party claim liability.
9. Payment of an application filing fee in an amount as set forth in the City’s fee resolution.
10 Proof of minimum liability insurance in the amount of $1,000,000 per incident and $2,000,000 million in the aggregate, adding the City as additional insured, and including certificates and endorsements demonstrating such coverage.
11. Any supplemental information or documentation deemed necessary by the Chief of Police.
D. Project Permits.
Under certain circumstances, a project or program permit will be more appropriate than a simple permit. A project permit is intended for projects such as operation pursuant to a film permit, research, or area realtors who use drone footage for marketing purposes, as well as educational or research projects. The project permit will include the scope of the project as any applicable conditions.
1. For commercial project permits, the permit application shall include, in addition to the above, the make, model, and serial or N-number of each UAS; the proposed duration of the project; the proposed flight activities and/or flight paths; written permission from private property owners, if applicable; and any other information deemed relevant by the Chief of Police.
2. For educational and research project permits, the permit application shall include the make, model, and serial or N-number of each UAS; the proposed duration of the project; the names and qualifications of the researchers/pilots; the project location (e.g., Hopkins Marine Station property and surrounding waters), and a list of projects that would include multiple flights and locations to determine the appropriate wildlife monitoring (e.g., based on location and time of year); and any other information deemed relevant by the Chief of Police. These permits can be amended by submitting and change in or additional information to the Chief of Police to ensure that adequate wildlife monitoring will be provided.
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be renewed annually upon filing of a renewal application and payment of a renewal fee as set forth in the City’s master fee resolution. Renewal applications must include any changes in information, such as a change of address, or changes in UAS being permitted. Any change in UAS under a permit while the permit is active requires an amendment to the permit.
F. Assignment. The permit is not assignable. No person other than the individuals identified in the permit may operate the UAS within the City.
Section 9.50.080 Denial; Grounds for Suspension, Revocation, and Renewal.
A. Denial. After the completion of the application review, the Chief of Police may deny the issuance an operating permit if the requirements of this chapter have not been satisfied, including if the applicant failed to submit a complete application or failed to pay the requisite application fee. The Chief of Police will notify an applicant of their decision in writing. An applicant whose permit is denied may resubmit the application to correct any defects, or may appeal the denial in accordance with the procedures set forth in this chapter. The decision on the application is final if no written appeal is timely submitted to and received by the City Clerk.
B. Grounds for Suspension, Revocation, or Nonrenewal. The Chief of Police may suspend, revoke, or deny a permit for renewal if the Chief of Police finds that the requirements of this chapter have not been satisfied or the permittee has violated any provision of this chapter.
The permittee must be notified of the decision in writing. The permittee may appeal the Chief of Police’s decision denying a renewal application, or suspending, or revoking a permit, in accordance with the procedures set forth in this chapter. The decision is final if no written appeal is timely submitted to and received by the City Clerk. If the Chief of Police revokes a permit, a new application may not be submitted for a period of one year.
Section 9.50.090 Appeals.
A. Any appeal right provided for in this chapter must be conducted as set forth in this section. An applicant or permittee may appeal the decision of the Chief of Police suspending, revoking, or denying an operating permit by filing with the City Clerk a written notice of appeal within fifteen calendar days from the date of service of the notice.
B. Except as modified in this subsection, all appeals under this section must be noticed, scheduled, heard, and decided in accordance with the administrative citation appeal procedures set forth in Chapter 1.17. In any appeal of a suspension, revocation, denial, or nonrenewal, the issues are limited to whether, under this chapter, the facts establish grounds for the Chief of Police’s decision.
C. The appeal decision is final and not subject to any further administrative review or appeal. It is the City’s final administrative decision for purposes of judicial review.
Section 9.50.100 Violations and Penalties.
A. It is unlawful and declared a public nuisance for any person to violate any provision of this chapter.
B. Violation of this chapter may result in seizure and impound of the UAS and shall be punished as set forth in Title 1 of this code.
C. Each and every day a violation is maintained, caused, aided, abetted, concealed, suffered, or permitted is a separate offense.
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4913-4683-0984 v1
SECTION 3. Existing Municipal Code chapter 11.72, entitled “Aircraft Landing” shall be amended by the deletion of all text shown in strikeout text (strikeout text) and by the addition of all text shown in bold, italic text (bold italic text), as follows:
Chapter 11.72 (Aircraft Landing)
11.72.010 Launch or landing prohibited.
It is unlawful for any person to launch or land an aircraft, including a helicopter, drone (“Uncrewed Aircraft System”), or other unmanned aircraft, without a permit.
11.72.020 Exceptions.
This chapter shall not apply if the following exceptions exist:
(a) A permit is issued for an Uncrewed Aircraft System by the city manager chief of police, or their designee, pursuant to Chapter 9.50;
(b) The landing of an emergency aircraft is authorized by the chief of police, or their designee.
SECTION 4. The City Manager is directed to execute all documents and to perform all other necessary City acts to implement this Urgency Ordinance.
SECTION 5. Severability. If any provision, section, paragraph, sentence, clause or phrase of this Urgency Ordinance , or any part thereof, or the application thereof to any person or circumstance is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Urgency Ordinance , or any part thereof, or its application to other persons or circumstances. The City Council hereby declares that it would have passed and adopted each provision, section, paragraph, subparagraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, paragraphs, subparagraphs, sentences, clauses or phrases, or the application thereof to any person or circumstance, be declared invalid or unconstitutional.
SECTION 6. In accord with Article 15 of the City Charter, this Urgency Ordinance shall become effective immediately upon its passage and adoption.
PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF PACIFIC GROVE this 21st day of January, 2026, by a four-fifths vote of the Council as follows:
AYES:
NOES:
ABSTAIN:
ABSENT:
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4913-4683-0984 v1
APPROVED:
_______________________________
NICK SMITH, Mayor
ATTEST:
DATED:_______________________
_______________________________
SANDRA KANDELL, City Clerk
APPROVED AS TO FORM:
_______________________________
Alex Lorca, City Attorney
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Agenda No. 12 A
CITY OF PACIFIC GROVE
300 Forest Avenue, Pacific Grove, California 93950
TO: Honorable Mayor and Members of the City Council
FROM: Matthew Mogensen, City Manager
MEETING DATE: January 21, 2026
SUBJECT: Review the City’s 5-Year General Fund and Infrastructure Needs and the Professional Services Agreement with Props and Measures CEQA: Does not constitute a Project per California Environmental Quality Act Guidelines Section 15378
RECOMMENDATION
1. Review the City’s 5-Year General Fund and Infrastructure Needs.
2. Review the Professional Service Agreement with Props and Measures Scope of Work.
Motion providing direction to the City Manager to proceed, modify, suspend or cancel the Public Services Agreement with Props and Measures.
3. DISCUSSION
On November 19, 2025, staff presented an update to the City’s General Fund 5-year fiscal forecast and summarized the 5-year CIP needs that were presented to the City Council at the November 5, 2025 Study Session. Attachment 1 is the PowerPoint for the November 19, 2025 Council meeting.
Attachment 2 is the PowerPoint for the November 5, 2025 Council meeting.
Recap of General Fund Fiscal Review
At the beginning of the fiscal year, the City Council was presented a budget that lowered revenue expectations by $700,000 (-2%) to account for softening revenues in larger categories. This budget also included a $1.4 million reduction in budgeted expenses to slow the expense growth rate and soften the impact of the 2% revenue reductions. Ultimately, due to the $1.4 million in capital outlay spending necessary and other factors, it was necessary to project a $1.96 million deficit spending for 25/26.
The General Fund 5-year fiscal forecast provided to the Council in June of 2025 incorporated the $1.96 deficit this fiscal year and a $2.57 deficit next fiscal year. This trajectory reduced the General Fund reserve levels from a ratio of 36% of expenditures this year to a ratio of 5% of expenditures in 2030.
The primary drivers of the fiscal challenges over the next five years include:
Additional salaries from expanding recreation programs, forester and city engineer positions Significant increases in insurance premiums
Capital Improvement/Replacement needs
Increasing PERS unfunded liability costs
Increasing employee compensation costs to maintain a minimum of competitiveness The updated General Fund 5-year fiscal forecast presented on November 19, 2025, updated the forecast to include $1 million in anticipated revenue from Kimpton Hotel TOT next fiscal year, $2 million anticipated TOT from the ATC in 2029, and the retirement of the annual $1.6 million Pension PGCC 1-21-26
Obligation Bond payment in 2029. The updated assumptions in the General Fund 5-year fiscal forecast improved the outlook by lowering next year’s projected deficit spending by $1 million to be negative $1.57 million and projected a balanced budget in 2030 ($1.6 million surplus when Pension bond payment is retired). The reserve levels are also updated to project a 35% reserve to expenses ratio next fiscal year and a 26% reserve to expense ratio in 2030.
While the updated 5-year General Fund forecast improves the fiscal outlook when the adjustments described above are incorporated, there are still additional adjustments needed going forward to maintain City services at today’s level. Since adoption of this fiscal year budget in June, staff has been working toward the goal of fiscal sustainability through several measures. This includes examination of both revenue and expenditure reduction opportunities.
Revenue options that may be practical for the City to investigate further in this effort that do not require voter approval include:
Looking to increase recovery rates for fees such as CDD Permits and Recreation programs Exploring options for enhancing parking revenues and efficiencies Facility rental process and fees
Exploring the availability of grant funding and sponsorships for special events Assessing an administrative fee on the collection of the BID / HID fees Expenditure reductions that may help to improve the projected General Fund fiscal health that are being studied include:
Debt service on pension obligation bonds ending in FY 2028-29 will result in savings of approximately $1.6 million annually, which can be used to further reduce pension obligations Additional regional partnerships for sharing services
Analyzing of contracting vs in house staff for services Evaluation annual museum contributions
Operational efficiencies that save staff time costs
Combining / reducing number of Boards and Commissions
Better integration of capital projects to meet multiple needs in one project Expand the digitization of city records
In order to strive for the City’s long-term fiscal sustainability while maintaining City services at levels that meet the quality of life expectations of residents in the future, it will take solutions on both the revenue and expenditure side of the ledger. Even with the solutions outlined above that are within the span of control of the City, it may still be necessary to engage voters to maintain service levels that they expect.
One of the primary purposes of conducting a scientific poll of Pacific Grove residents is to understand what quality of life services and expectations they value most. With this direct input from residents the City can better adjust spending toward the services most highly valued and reduce services that are not as important. Additionally, polling will help the City to understand if additional revenue will be necessary to meet resident expectations and if voters would be inclined to support more revenue.
In addition to the General Fund fiscal sustainability concerns over the next 5 years, the development of the 5-year CIP needs indicates that a substantial amount of funding will be needed to pay for the City’s Pavement Management Plan to improve the roadway conditions to sustainable levels and to fund ongoing city facility maintenance.
Recap of the 5-year Capital Improvement Schedule Development Staff has been working on developing long-term capital need schedules so that the City can adequately plan to address the ongoing future needs. On November 5, 2025, the City Council received a Study Session presentation that communicated the currently known 5-year Infrastructure needs.
The future infrastructure needs that are summarized in the 5-year CIP Schedule include the categories of Transportation (streets), Sewer, Stormwater, Facilities and Parks/Recreation. The most complete information the City has today regarding the 5-year CIP are the street needs from the Pavement Management Plan and the Facilities needs from the Facility Assessments that have been performed on all facilities over the last year. The combination of the two sources of information indicate that in order PGCC 1-21-26
to fund streets and facilities alone to the recommended maintenance levels, the City has an unfunded need of approximately $1.7 million next fiscal year and an average of $2.25 million over the next 4 years. For 2026 we also are seeking grants for an additional $1.45 million to repair the pier.
The City’s General Fund has been able to fund approximately $600,000 annually for street maintenance. According to the Pavement Management Plan the City should be spending approximately $2.4 million annually to maintain its streets to adequate standards. That is approximately $1.8 million more than the General Fund has been able to contribute annually. Additionally, the Facility Assessments completed for each building indicates that the City should be funding approximately $1.5 million on average every year to maintain the City’s facilities.
The two currently known categories of CIP needs over the next five years require an additional $2.054 million on average annually to maintain the City’s streets and facilities to an adequate level. The City has yet to identify the source of the additional $2.054 million annually but is expected to be partially filled by regional mechanisms such as Measure X, grants where possible, and yet to be identified revenues. As described above in the General Fund Fiscal Review section of this report, the General Fund does not have additional funds to devote at this time.
In the coming years, staff will be working on developing the CIP needs for the categories of Sewer (special fund), Stormwater (special fund) and Parks/Recreation. When these needs are developed and known we expect that the unfunded needs will increase. Additional capital replacement schedules for vehicles, IT infrastructure and heavy equipment will also be formalized in the coming years to understand the needs of those City assets.
Another primary purpose of conducting a scientific poll of Pacific Grove residents is to understand exactly what level of infrastructure standards our residents expect and value most. With this direct input from residents the City can better adjust spending toward the perceived most highly valued infrastructure and reduce spending where it isn’t found to be as important to residents. Additionally, polling will help the City to understand if additional revenue will be necessary to meet resident expectations and if voters would be inclined to support more revenue.
Proposed Agreement with Props and Measures
On November 19, 2025, the City Council considered and approved a Professional Services Agreement with Props and Measures (see Attachment No. 3) to:
Phase 1 - Conduct polling of Pacific Grove residents to determine: their knowledge and understanding of the City’s fiscal constraints; to understand their perception of the City’s services and infrastructure; understand what outside external and internal factors would impact their support of a potential revenue measure; and, to determine overall potential revenue measure viability.
Phase 2 and 3 - Assist City staff with communicating the City’s fiscal needs to meet the resident expectations and basic infrastructure needs (if determined necessary based on the polling).
Phase 4 - Assisting with developing a revenue measure that seeks funding approval that services to meet the communicated desires of the voters (if determined viable).
As indicated in the Proposal from Props and Measures and required by law, all publicly funded communication by the City in this work effort must be informational and not advocacy. Once a measure is on the ballot (Phase 4), all communication would need to be coordinated by an independent campaign committee using private resources.
The approved Professional Services Agreement is broken into phases to allow the City to approve additional work and spending without committing to the entire not to exceed amount of $141,530, if all four phases are completed. The City can stop work at the end of any phase and not expend further funds if that is desired. The first decision will be after the first phase, which will cost an estimated amount of $53,150. After the first phase, should Council decide to continue forward, the cost of the remainder of the contract will not exceed $88,380. The total breakdown of the Fees and Costs is listed in the table below. The agreement was proposed in the phased manner to limit the City’s spending to be as efficient and possible, and to be transparent with the community as to the total cost of this work should the City pursue all four phases of the Scope of Work. The City will only pay for actual services that it chooses to authorize as we go.
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Fees and Costs
Phase 1 Consulting December 2025 – February 2026 $19,500 Phase 2-3 Consulting March 2026 – August 2026 $39,000
Informational Mailings 2 Mailings $22,180
Expenses (Travel, copies, etc.) $5,000
Baseline survey $28,650
Tracking survey (If needed) $27,200
Total NTE $141,530
Props and Measures Agreement Work Plan Review
Since approval of the agreement with Props and Measures to perform the work described above, the City has heard various concerns and criticism regarding the costs or Scope of Work. Based on these concerns, staff felt it a prudent step to bring this item back the City Council for further review and direction.
One concern communicated is that the costs of the work are too high when the City needs funds. While this is a viable concern, the nature of the funding shortfalls are not one-time funding concerns but annually going forward. This means that the one-time investment and understanding if the community wishes to support a revenue measure could result in new revenue every year (which is the need) while the cost for this effort is one time. Additionally, there is a great deal of expertise and work that are required to conduct a truly scientific poll that will give the best accurate result of the community input.
Other concerns that have been communicated are that the City needs to cut its expenses to right size to address the 5-years General Fund and 5-year Infrastructure needs. As described earlier in this report, staff has been, and will continue, investigating and pursuing several expenditure reducing activities.
Unfortunately, these cost reduction strategies alone are not going to provide enough relief to meet General Fund and Infrastructure needs and more solutions such as voter approved revenue enhancements will be another piece of the solution.
With regard to the services to be performed by Props & Measures, these services will not include advocacy or campaigning. Although it is clear that public resources may not be used to advocate for or against ballot measures, expenditures and activities made prior to the time a measure is certified to be placed on a ballot present a very different situation. Cities may expend public funds to do exactly what the Props & Measures work will do, namely, study, analyze, poll, test community support, and develop potential ballot measure language prior to placing any measure on the ballot. Moreover, if and when the Council certifies a measure to be placed on the ballot, then City will take steps such that no public funds or resources will be used for any sort of campaigning or advocacy.
To date, minimal work has been performed toward Phase 1 of the Agreement. A poll has not been finalized or conducted. Based on resident feedback, staff is requesting that the City Council reconfirm its decision to move forward with the Scope of Work in the Props and Measures Agreement.
To date, minimal work has been performed toward Phase 1 of the Agreement. A poll has not been finalized or conducted. Based on resident feedback, staff is requesting that the City Council reconfirm its decision to move forward with the Scope of Work in the Props and Measures Agreement.
OPTIONS
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Direct staff to proceed with the Professional Services Agreement with Props and Measures as described on November 19, 2025, and return after Phase 1 for further authorization of Phase 2.
1. Direct staff to proceed with Phase 1 of the Professional Services Agreement with Props and Measures as described on November 19, 2025, and conclude the Agreement before starting Phase
2. 2.
Direct staff to suspend the Professional Services Agreement with Props and Measures approved on November 19, 2025, until authorized to proceed.
3. Direct staff to cancel the Professional Services Agreement with Props and Measures approved on November 19, 2025.
4. FINANCIAL IMPACT:
As described and authorized in the approved Professional Services Agreement on November 19, 2025, the total costs are estimated to be $141,530 if the City pursues all four phases of the Scope of Work.
The scope of work is broken down into phases that allow the City to cancel the agreement at anytime.
The first phase totals $53,150 and will consist of $19,500 for the consultant (plus $5,000 for travel and direct costs) and $28,650 for the polling. After the first phase, should Council decide to continue forward, the cost of the second phase is estimated to be a total of $88,380, consisting of $39,000 for the consultant (plus travel and direct costs noted above), $27,200 for an optional second polling and $22,180 for 2 rounds of informational mailers.
FOCUSED PRIORITY AREA: Financial Sustainability
Attachments
November 19, 2025 Presentation
November 5, 2025 CIP Study Session Presentation
Agreement with Props and Measures
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Review of Five Year Forecast /
Funding of Infrastructure
November 19, 2025
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 2 PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 3 General Fund 5 Year Forecast
(In Thousands)
Proposed Projected Projected Projected Projected
Category 25-26 26-27 27-28 28-29 29-30
Revenues: $ 32,729 $ 33,303 $ 34,385 $ 35,505 $ 36,663
Expenses:
Operating Expenses 26,942 28,233 29,080 29,953 30,851
Pension / Debt Obligations 6,260 6,588 7,154 7,708 6,199 Capital Outlay / Transfers 1,488 1,056 1,087 1,119 1,153 Total Expenses 34,689 35,876 37,321 38,780 38,203
Net Change for Fiscal Year $ (1.96M) $ (2.57M) $ (2.94M) $ (3.28M) $ (1.54M) Projected Ending Reserves $ 12.02M $ 9.45M $ 6.51M $ 3.24M $ 1.70M Projected Reserve Level 36% 27% 18% 9% 5%
Proposed
Two Year Budget
Future Trends
(Not accounting for new hotels)
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 4 General Fund 5 Year Forecast
(In Thousands)
Proposed Projected Projected Projected Projected
Category 25-26 26-27 27-28 28-29 29-30
Revenues: $ 32,729 $ 33,303 $ 34,385 $ 35,505 $ 36,663
Projected revenues new hotels 1,000 1,050 1,100 3,150
Expenses:
Operating Expenses 26,942 28,233 29,080 29,953 30,851
Pension / Debt Obligations 6,260 6,588 7,154 7,708 6,199 Capital Outlay / Transfers 1,488 1,056 1,087 1,119 1,153 Total Expenses 34,689 35,876 37,321 38,780 38,203
Net Change for Fiscal Year $ (1.96M) $ (1.57M) $ (1.89M) $ (2.18M) $ 1.61M Projected Ending Reserves $ 13.70M $ 12.13M $ 10.24M $ 8.07M $ 9.68M Projected Reserve Level 41% 35% 28% 21% 26%
Adopted 2 Year Budget Future Trends
(Reflects FY 24-25 actuals) (Accounting for new hotels) PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 5 • Wages - Assumes no additional staffing for the five year period, and future annual COLA adjustments to be similar to those in the current employees’ MOUs.
• Other Operating Expenses - 3% annual increase, similar to the assumed future rate of inflation. Assumes no additional contributions to pension or capital reserves.
• Debt Service / Pension Actuarial Liabilities - Incorporates debt service on debt through their maturities. Pension includes estimated amounts from CalPERS actuarials. Assumes CalPERS will attain its annual assumed rate of return of 6.8%.
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6 Projected Future Shortfalls Due To:
• Minimal increases or stagnant revenues in most categories • Funding increased amounts for unfunded actuarial pension liability
• Funding of anticipated increases in employee compensation in future fiscal years (assumed 3% annually)
• Additional PT salaries from expanding Recreation programs • Significant increases in insurance premiums
11/19/2025 Five Year Forecast / Funding of City Infrastructure PGCC 1-21-26
7 Revenues:
• Hotel Taxes from New Downtown Hotel
(Estimated $1.0-$1.5 million annually beginning in FY 2026-27) • Hotel Taxes from potential new hotel at former outlet mall (ATC) (Estimated $2 million annually beginning in FY 2029-30) • Looking to increase recovery rates for CDD / Recreation • Explore Options for enhancing parking revenues and efficiencies • Review of Facility Rental Process and Fees
• Explore the availability of grant funding and sponsorships for special events • Assessing an administrative fee on the collection of the BID / HID fees 11/19/2025 Five Year Forecast / Funding of City Infrastructure PGCC 1-21-26
8 Expenditures:
• Debt service on pension obligation bonds ending in FY 2028-29 Resulting in savings of approximately $1.6 million annually • Looking into the feasibility of additional regional partnerships • Analyzing of contracting vs in house staff for services • Evaluate annual museum contributions
• Continuing to strive for additional operational efficiencies • Combine / reduce number of boards
• Integration of sewer and street components on projects • Expand the digitization of city records
11/19/2025 Five Year Forecast / Funding of City Infrastructure PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 9 PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 10 Number of Projects
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 11 Number of Projects
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 12 (2024)
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 13 Note: The General Fund Contribution for CIP was $7.4 Million total over the past six fiscal years.
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 14 PGCC 1-21-26
11/19/2025 Funding of City Infrastructure Needs 15
Note: Sewer fees were last increased in Fiscal Year 2024-25. Public Works staff will be working with a consultant to prepare an update to the study on sewer infrastructure, to be presented to Council in the future along with recommendations for changes to the fee structure.
Category FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31
5 Year Totals
(FY 26-27
to 30/31)
Future Years
(FY 31-32
to 35-36)
Total
Needs
Transportation 1.51$ 2.41$ 2.43$ 2.83$ 2.96$ $ 12.14 $ 11.88 $ 24.02 Sewer 2.15 8.35 4.42 0.65 0.86 16.43 TBD 16.43
Stormwater TBD TBD TBD
Facilities 1.53 2.76 0.57 1.13 1.58 7.57 6.26 13.83
Parks / Recreation 1.45 1.45 TBD 1.45
Totals $ 6.09$ 7.42$ 4.61$ 5.40$ 14.07 $ 37.59 $ 18.14 $ 55.73 Note: In Millions
TBD
TBD
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11/19/2025 Five Year Forecast / Funding of City Infrastructure 16 The infrastructure needs and funding gaps summary compares identified needs with available funding, highlighting where funding falls short.
Category FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31
5 Year Totals
(FY 26-27
to 30/31)
Future Years
(FY 31-32
to 35-36)
Total
Needs
Transportation (0.19)$ 0.72$ 0.72$ 1.12$ 1.24$ $ 3.61 $ 3.27 $ 6.88 Sewer - TBD -
Stormwater TBD TBD TBD
Facilities 1.53 1.86 0.57 1.13 1.57 6.66 6.26 12.92
Parks / Recreation 1.45 1.45 TBD 1.45
Totals 3.12$ 2.25$ 1.29$ 2.25$ 2.81$ $ 11.72 $ 9.53 $ 21.25 Note: In Millions
TBD
TBD
TBD
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17 • Stagnant or decreasing revenues in most tax categories • Increased amounts needed to funded actuarial pension liability
• Compensation adjustments needed to remain competitive in labor market • Concerns about potential impacts of future inflation
• Non-tax Revenues will continue to be pursued, including grants and parking • Revenue Recovery Rates will be reevaluated for Recreation / CDD Activities • Operations will continue to be evaluated for opportunities for more efficiencies • Additional funding is needed to address deferred maintenance of streets / facilities 11/19/2025 Five Year Forecast / Funding of City Infrastructure PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 18 PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 19 PGCC 1-21-26
11/19/2025 Five Year Forecast / Funding of City Infrastructure 20 PGCC 1-21-26
21 PGCC 1-21-26
Five Year CIP
& Identified Infrastructure Needs
CITY COUNCIL STUDY SESSION NOVEMBER 5, 2025
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Provide an update on development of
the City’s 5-Year Capital Improvement
Plan (CIP)
Highlight two key infrastructure areas
(Pavement & Facilities) where data is
robust and insight on long term needs
Purpose of Study Session
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A 5-Year CIP helps the City plan for the future and invest in the infrastructure that supports daily life in our community.
Ensures major infrastructure needs are addressed before they become costly emergencies.
Allows the City to:
Prioritize projects
Coordinate work across systems
Align funding with realistic timelines & goals
Avoid surprises, leverage grants, & maximize local dollars.
The 5-Year CIP: Why It Matters
Goal: Build a data-driven roadmap to identify long-term needs & support proactive asset management.
5 Year CIP Development - task in Council’s 2025-2027 Community Goals & Workplan! PGCC 1-21-26
To accurately assess infrastructure priorities, the
City must first evaluate and document all existing
asset data.
Historically, only the sewer system had a complete,
data-driven plan
Since 2019, City has expanded data collection to
include 2 major categories - pavement & facilities
& made significant strides to a more proactive CIP.
Building the 5 Year CIP
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Infrastructure Category Subcategory Data Status
Transportation
Pavement Data Complete
Sidewalks No Data
Sewer
Sewer Collection System Partial Data Available
Pump Stations Data Complete
Stormwater Stormwater Infrastructure Study Needed
Facilities
Buildings Data Complete
Pool No Data
Parks and Recreation
Parks & Playgrounds Study Needed
Lovers Point Pier Data Complete
Trails & Pathways No Data
Infrastructure Data
This Table, Attachment 1, summarizes the City’s five CIP infrastructure categories and the current level of available data.
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Some systems have complete, reliable data to
define long-term needs (Pavement)
Others have partial data (Sewer)
Some have known study costs, but data
collection is still pending (parks/playgrounds)
A few systems still lack baseline information, and
study costs are unknown
Building the 5 Year CIP
We’ve made major progress in identifying our infrastructure & understanding needs, but more work remains to close data gaps.
What we know now gives us a strong foundation for 5- and 10-year planning.
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Category FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Year Totals
(FY26/27-
30/31)
FUTURE YEARS
(FY31/32
-35/36)
TOTAL
NEEDS
Transportation $1.51M $2.41M $2.43M $2.84M $2.96M $12.14M $11.88M $24.02M Sewer $8.35M $2.15M $4.42M $654,000 $857,000 $16.43M TBD $16.43M Stormwater TBD TBD TBD TBD
Facilities $2.76M $1.53M $569,906 $1.13M $1.58M $7.56M $6.26M $13.82M Parks/ Rec $1.45M TBD TBD TBD $1.45
TOTALS $14.07M $6.09M $7.42M $4.63M $5.39M $37.59M $18.13M $55.72M Identified Infrastructure Needs
The table below summarizes known, quantified infrastructure needs for assets that have been assessed.
Categories with unknown needs (e.g., sidewalks) and future study costs are excluded (TBD).
Report Attachment 3
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Category
5 Year Totals
(FY26/27-30/31)
FUTURE YEARS
(FY31/32 -35/36)
TOTAL
NEEDS
Transportation $12.14M $11.88M $24.02M
Sewer $16.43M TBD $16.43M
Stormwater TBD TBD TBD
Facilities $7.56M $6.56M $13.82M
Parks/ Rec TBD TBD $1.45M
TOTALS $37.59M $18.13M $55.72M
Identified Infrastructure Needs
Over the next five years, the City has identified approximately $37.6M in infrastructure needs.
The following five years add another $18.1M, bringing the total 10-year need to about $55.7M.
This provides a snapshot of known needs, but also highlights that additional data is needed— especially for major systems like future sewer improvements—to complete the full picture.
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Category FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Year
Totals
(FY26/27-
30/31)
FUTURE
YEARS
(FY31/32
-35/36)
TOTAL
Transportation $(177,519) $714,613 $716,122 $1.12M $1.24M $3.61M $3.27M $6.88M Sewer TBD TBD TBD TBD
Stormwater TBD TBD TBD TBD
Facilities $1.86M $1.53M $569,906 $1.13M $1.58M $6.67M $6.26M $13.82M Parks & Recreation $1.45M TBD $1.45M TBD TBD
TOTALS $3.13M $2.24M $1.29M $2.25M $2.81M $11.72M $9.53M $20.7M Funding Gaps, Unmet Needs
The Infrastructure Needs & Funding Gaps Summary (Attachment 4) compares identified needs with available funding, highlighting where funding falls short.
The “Totals” column shows unfunded needs (in millions)—the gap between identified needs and available funding by category
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Category
5 Year Totals
(FY26/27-30/31)
FUTURE YEARS
(FY31/32 -35/36)
TOTAL
Transportation $3.61M $3.27M $6.88M
Sewer TBD TBD TBD
Stormwater TBD TBD TBD
Facilities $6.67M $6.26M $13.82M
Parks & Recreation $1.45M TBD TBD
TOTALS $11.72M $9.53M $20.7M
Funding Gaps, Unmet Needs
Looking at the 5- and 10-year totals:
• $11.7M in unfunded needs over the next 5 years
• $9.5M unfunded in the following 5 years
• $20.7M total unfunded needs over 10 years
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Assessments Needed Potential Cost
Parks & Playground Assessment $27,000
Stormwater Infrastructure Management Plan $700,000
Sewer Collection System Management Plan $600,000
Sidewalks TBD
Trails & Pathways TBD
TOTAL NEEDED $1,327,000
Addressing funding gaps is only part of the challenge — we also need to close data gaps to fully understand future needs. Below is a table with assessment needs and estimated costs, if known.
Filling the Gaps
At least $1.3M in studies is needed to close known gaps and complete the CIP dataset
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Future Steps
Complete data collection and
condition assessments for existing gaps
Refining cost estimates and funding
assumptions
Expanding 5 year CIP to include capital
outlay items (e.g., vehicles, equipment,
IT infrastructure)
What’s Next 5-Year CIP
CIP development is ongoing — it’s a living document that will evolve as data improves.
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Now that we’ve seen the overall 5-Year
CIP framework, let’s look closer at where
we have strong data and clear needs.
Two systems stand out for having robust
data and defined funding gaps:
Pavement
Facilities
From the Big Picture to Key
Systems
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Pavement
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Comprised of 65 centerline miles
Partnered with TAMC in 2019 to evaluate all
streets and develop the PMP; Reassessed
every 5 years, latest update completed 2023
PMP helps the City:
Prioritize maintenance and
rehabilitation
Maximize limited funding
Plan long-term investments
Pavement Network at a Glance
Before we can plan for what’s next, we need a clear picture of how our pavement network is performing today.
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0-25
Very Poor/Failed
25-50
Poor
50-70
Fair
70-100
Good/Very Good
Pavement condition is measured using the Pavement Condition Index (PCI) — a score from 0 (failed) to 100 (new).
Current Pavement Conditions
Average network PCI fluctuates each
year based on completed work &
natural aging of untreated streets.
PMP continuously models network
deterioration & improvement; PCI
scores are dynamic and data-driven.
Historical PCI Trends Current PCI is 55 (Fair)
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Current Pavement Conditions
While our overall PCI remains similar to 2019,
targeted investments have paid off, we’ve
reduced the share of roads rated “poor” or
“failed” from 54% to 40%, and increased “fair”
to “very good” roads from 47% to 60%.
This progress is significant, but 40% of our
network still needs major repair. Continued
investment will help us shift toward maintaining
good roads in good condition, which is the
most cost-effective strategy long term.
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The Pavement Management Program (PMP) recommends the City aim for an average PCI of 70 within 10 years.
Pavement needs based on this target total:
• ~ $12 million over the next 5 years
• ~ $24 million over the next 10 years
PAVEMENT FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Year Totals
(FY26/27-
30/31)
FUTURE YEARS
(FY31/32
-35/36)
TOTAL
Funding Needs
to Reach PCI
70 (10-Year
$1.51M $2.41M $2.43M $2.84M $2.96M $12.14M $11.88M $24M Identified Pavement Needs
Attachment 5 includes additional information
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PAVEMENT FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Year Totals
(FY26/27-
30/31)
FUTURE YEARS
(FY31/32
-35/36)
TOTAL
Funding Needs
to Reach PCI
70 (10-Year
$1.51M $2.41M $2.43M $2.84M $2.96M $12.14M $11.88M $24M Identified Pavement Needs
• Figures do not include sewer, stormwater, ADA, or sidewalk improvements. • Deferred maintenance = higher costs later.
• Strategy: Fix worst roads first, then focus on prevention.
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Measure X: Local ⅜-cent sales tax approved in 2016; generates about $20M annually countywide (60% for local roads).
SB 1 / RMRA: State gas tax revenue enacted in 2017; supports pavement preservation and rehabilitation.
General Fund (MOE): To remain eligible for Measure X & SB1, MOE must be met; MOE is a minimum level of General Fund spending on streets & roads. City allocates $500,000 annually to meet MOE.
This contribution is considered funded, as it ensures ongoing eligibility for supplemental funding & reflects a consistent annual commitment.
To understand the extent of unfunded pavement needs, we must first look at the funding sources dedicated to roadway improvements. The City relies on three primary funding sources for pavement projects:
Funding Sources
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TRANSPORTATION -
PAVEMENT FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Year
Totals
FUTURE
YEARS
(FY31/32
-35/36)
TOTAL
Identified Needs $1.51M $2.41M $2.43M $2.84M $2.96M $12.14M $11.88M $24M Funding
Source 1 Measure X $784,575 $792,000 $800,000 $808,000 $808,000 $3.99M $4.04M $12.03M Funding
Source 2 Senate Bill 1 $400,628 $405,000 $409,000 $413,000 $413,000 $2.04M $2.07M $6.15M Funding
Source 3
General
Fund* $500,000 $500,000 $500,000 $500,000 $500,000 $2.50M $2.50M $7.5M Totals Unfunded Needs $(177,519) $714,613 $716,122 $1.12M $1.24M $3.61M $3.27M $6.88M Unmet Pavement Needs
Attachment 6, includes the table below, which shows the identified pavement needs, the estimated available funding & sources, and resulting unfunded pavement needs.
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While Measure X and SB1 funding helps supports ongoing pavement investment, it’s not enough to:
Achieve and sustain the PCI 70 goal, or
Fully address the existing backlog of repairs.
The PMP identifies $24M total need over 10 years, leaving:
~$3.6M unfunded over the next 5 years, and
~$7M unfunded over 10 years.
Unmet Pavement Needs
Pavement network is improving, but long-term
sustainability requires additional investment.
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Current Road Conditions
Pine Avenue Forest Avenue
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Facility
Projects
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City owns and maintains 18+ facilities, from City Hall and Police Station to the Youth Center, Library, and leased sites like the Golf Course.
All differ in age and purpose, but all support core City services and functions.
With so many critical facilities providing everything from public safety and permits to community meetings and recreation, it’s essential to understand their long-term needs holistically.
System Overview: City Facilities
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In 2024, the City launched Facility Condition
Assessments (FCAs) to understand facility
condition and long-term capital needs.
First phase assessed 5 key buildings: City Hall, Fire
Station, Police Station, Public Works Yard, and
Youth Center.
In 2025, additional10 facilities assessed, giving the
City near-complete coverage of all buildings.
These assessments provide the data foundation
for smart, long-term facility planning
Assessing Facility Conditions:
Building the Data Foundation
This is the first time we’ve had comprehensive, data-driven information about our facilities. It’s helping us prioritize what to fix and how to plan ahead.
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Not all facilities have standard Facility Condition
Assessments (FCAs). Some facilities have
specialized functions or prior studies conducted
separately.
Chautauqua Hall: 2024 Building Assessment by
WJE;
Local Water Project: 2021 business plan provides
estimates on equipment replacement costs;
Point Pinos Lighthouse: Preservation study
completed in 2009; new assessment needed for
long-term maintenance.
Specialized Facility Assessments
Where available, data from these studies has been incorporated into the overall facility needs analysis.
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FCI Range Definition
0-5% New or well-maintained condition w/little or no visual evidence of wear & tear
5-10% Subjected to wear but is still in a serviceable and functioning condition
10-30% Subjected to hard or long-term wear. Nearing end of useful/serviceable life
30% & above Has reached the end of a useful or serviceable life.
Renewal is now necessary
Our Facility Data
Like the Pavement Condition Index (PCI) for roads, the Facility Condition Index (FCI) measures the condition of buildings.
FCI = (Cost of Current Needs ÷ Replacement Value)
Lower FCI → Better condition
Higher FCI → Greater need for reinvestment
Replacement Value = The cost to restore a building to its current state.
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What happens without
continued investment?
• Today, only 1 facility (FCI > 5%) most are in the “well maintained” category (FCI 0-5%) • But these are averages, all have near-term maintenance needs If maintenance items are deferred,
• In 5 years, ~23% of assessed facilities could reach 10–30% FCI (aging) • In 10 years, ~60% of assessed facilities could reach 10–30% FCI, with 1 FCI>30% (end of life)
Right now, our buildings are in good shape, but without ongoing investment, that will change quickly. By year ten, over half of our facilities will need significant capital investments.
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Recent Facility Condition Assessments provide a strong basis for long-term facility investment planning to ensure buildings remain in good condition.
Identified needs:
~$7.5M over the next five fiscal years
~$14M total over ten years
These investments ensure facilities remain safe, functional, and communityserving into the next decade.
Identified
Facility Needs FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Yeat Total
FY26/27-
30/31
FUTURE YEARS
(FY31/32 -
FY35/36)
TOTAL NEEDS
Grand Total $2.76M $1.53M $569,906 $1.13M $1.58M $7.56M $6.26M $13.82M Identified Facility Needs
Attachment 6 shows a breakdown of needs per facility.
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Identified “Immediate Needs”
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Currently, no dedicated funding for general facility improvements.
As a result, most major facility needs remain unfunded. One exception:
Chautauqua Hall improvements are funded through community donations from the Friends of Chautauqua Hall.
Funding Summary & Unmet
Needs
UNFUNDED FACILITY NEEDS:
~ $6.66M over the next 5 years
~$13.82M total over 10 years
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FACILITIES FY26/27 FY27/28 FY28/29 FY29/30 FY30/31
5 Year
Totals
(FY26/27-
30/31)
FUTURE
YEARS
(FY31/32
-35/36)
TOTAL
Identified Needs $2.75M $1.53M $569,906 $1.13M $1.58M $7.56M $6.26M $13.82M Funding
Source 1
Friends of
Chautauqu
a Hall
$900,000 $- $- $- $- $- $- $-
Unfunded Facility Needs $1.86M $1.53M $569,906 $1.13M $1.58M $6.66M $6.26M $13.82M Funding Summary and Unmet
Needs
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5 Year Totals
(FY26/27-30/31)
FUTURE YEARS
(FY31/32 -35/36)
TOTAL
Unfunded Needs $11,723,339 $9,526,307 $20,699,646
Key Takeaways
This is the first step toward fully understanding long-term infrastructure needs.
Data gaps remain (long term sewer, parks, sidewalks, and other systems) those still need to be evaluated.
Data we do have provides a solid foundation for identifying current needs & funding gaps.
Today’s analysis offers a baseline that will expand as more data is collected, meaning total needs and funding requirements will continue to grow.
What we have today gives us a clear path forward for maintaining pavement and facilities in good condition.
We already faces a significant unfunded need across the infrastructure elements that have been assessed. Next steps include developing strategies to close these gaps and ensure sustainable investment moving forward.
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Next Steps
On November 19, staff will return to Council with an update on the status General Fund.
What we’ve shared today represents a separate challenge— one that extends beyond what the General Fund alone can address and will require additional solutions.
Thank You! Questions?
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1 CITY OF PACIFIC GROVE
PROFESSIONAL SERVICES AGREEMENT
This PROFESSIONAL SERVICE AGREEMENT (“PSA”) FOR NON-CONSTRUCTION PROJECTS (“Agreement”), is made and effective as of December 1, 2025, between the City of Pacific Grove (“City”), a municipal corporation and TERRIS BARNES WALTERS BOIGON HEATH LESTER, INC., a California Corporation (DBA “Props & Measures (“CONSULTANT”). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows:
1. TERM
This Agreement shall commence on December 1, 2025 and shall remain and continue in effect until the tasks described herein are completed, but in no event later than August 15, 2026, unless sooner terminated pursuant to the provisions of this Agreement.
2. SCOPE OF WORK
CONSULTANT shall perform the tasks and services (“Services”) described and set forth in Exhibit A, Scope of Services, attached hereto and incorporated herein as though set forth in full.
CONSULTANT shall complete the tasks according to the schedule of performance which is also set forth in Exhibit A. To the extent that Exhibit A is a proposal from CONSULTANT, such proposal is incorporated only for the description of the Scope of Services and no other terms and conditions from any such proposal shall apply to this Agreement unless specifically agreed to in writing.
3. PERFORMANCE
CONSULTANT shall at all times faithfully, competently and to the best of their ability, experience, and talent, perform all Services described herein. CONSULTANT shall employ, at a minimum, generally accepted standards and practices utilized by persons engaged in providing similar services as are required of CONSULTANT hereunder in meeting their obligations under this Agreement.
4. CITY MANAGEMENT
The City Manager, or their designee, shall represent City in all matters pertaining to the administration of this Agreement, review and approval of all products submitted by CONSULTANT, but not including the authority to enlarge the Scope of Work or change the compensation due to CONSULTANT. The City Manager shall be authorized to act on City’s behalf and to execute all necessary documents that enlarge the Scope of Work or change CONSULTANT’s compensation, subject to Section 6 hereof.
5. PAYMENT
a. The City agrees to pay CONSULTANT monthly, in accordance with the payment rates and terms and the Payment Schedule as set forth in Exhibit B, attached hereto and incorporated herein by this reference as though set forth in full, based upon actual time spent on the above PGCC 1-21-26
2 tasks. This amount shall not exceed One Hundred Forty One Thousand Five Hundred and Thirty dollars $141,530.00) for the total term of the Agreement unless additional payment is approved as provided in this Agreement.
b. The City Manager’s contract authority is limited to $39,999.99, which includes all costs.
Contracts, including any contract amendments that exceed the total threshold, require City Council approval. Any contracts, including contract amendments that exceed the total threshold, which do not have City Council approval, shall be void. c. CONSULTANT shall not be compensated for any Services rendered in connection with its performance of this Agreement that are in addition to those set forth herein, unless such additional services are authorized in advance and in writing by the City Manager or the City Council. CONSULTANT shall be compensated for any additional services in the amounts and in the manner as agreed to by City Manager and CONSULTANT at the time City’s written authorization is given to CONSULTANT for the performance of said services. d. CONSULTANT shall submit invoices monthly for actual Services performed. Invoices shall be submitted on or about the first business day of each month, or as soon thereafter as practical, for Services provided in the previous month. Payment shall be made within thirty (30) days of receipt of each invoice as to all non-disputed fees. If the City disputes any of CONSULTANT’s fees it shall give written notice to CONSULTANT within thirty (30) days of receipt of an invoice of any disputed fees set forth on the invoice. Any final payment under this Agreement shall be made within forty-five (45) days of receipt of an invoice therefore.
6. INSPECTION
City shall at all times have the right to inspect the work and materials. CONSULTANT shall furnish all reasonable aid and assistance required by City for the proper examination of the work and all parts thereof. Such inspection shall not relieve CONSULTANT from any obligation to perform said work strictly in accordance with the specifications or any modifications thereof and in compliance with the law.
7. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT CAUSE a. The City may at any time, for any reason, without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon CONSULTANT at least thirty (30) days prior written notice. Upon receipt of said notice, CONSULTANT shall immediately cease all Services under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. b. In the event this Agreement is terminated pursuant to this Section, the City shall pay to CONSULTANT the actual value of the Services performed up to the time of termination, provided that the Services performed are of value to the City. Upon termination of the Agreement pursuant to this Section, CONSULTANT will submit an invoice to the City pursuant to Section 6.
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3 8. DEFAULT OF CONSULTANT
a. CONSULTANT’s failure to comply with the provisions of this Agreement shall constitute a default. In the event that CONSULTANT is in default for cause under the terms of this Agreement, City shall have no obligation or duty to continue compensating CONSULTANT for any Services performed after the date of default and can terminate this Agreement immediately by written notice to the CONSULTANT. If such failure by the CONSULTANT to make progress in the performance of Services hereunder arises out of causes beyond the CONSULTANT’s control, and without fault or negligence of the CONSULTANT, it shall not be considered a default.
b. If the City Manager or designee determines CONSULTANT is in default in the performance of any of the terms or conditions of this Agreement, they shall cause to be served upon CONSULTANT a written notice of the default. The CONSULTANT shall have ten (10) days after service upon it of said notice in which to cure the default by rendering a satisfactory performance. In the event CONSULTANT fails to cure its default within such period of time or fails to present City with a written plan for the cure of the default, City shall have the right, notwithstanding any other provision of this Agreement, to terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement.
9. OWNERSHIP OF DOCUMENTS
a. CONSULTANT shall maintain complete and accurate records with respect to sales, costs, expenses, receipts, and other such information required by City that relate to the performance of Services under this Agreement. CONSULTANT shall maintain adequate records of Services provided in sufficient detail to permit an evaluation of Services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. CONSULTANT shall provide free access to the representatives of City or its designees at reasonable times to such books and records; shall give City the right to examine and audit said books and records; shall permit City to make transcripts or copies therefrom as necessary; and shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement. If there is a substantial billing deviation adverse to City, then the cost of an audit shall be borne by CONSULTANT. Such records, together with supporting documents, shall be maintained for a period of five (5) years after receipt of final payment. b. Upon completion of, or in the event of termination or suspension of this Agreement, all original documents, designs, drawings, maps, models, computer files, surveys, notes, and other documents prepared in the course of providing the Services to be performed pursuant to this Agreement shall become the sole property of City and may be used, reused, or otherwise disposed of by City without the permission of CONSULTANT. With respect to computer files, CONSULTANT shall make available to City, at CONSULTANT’s office and upon reasonable written request by City, the necessary computer software and hardware for purposes of accessing, compiling, transferring, copying and/or printing computer files.
CONSULTANT hereby grants to City all right, title, and interest, including any copyright, in and to the documents, designs, drawings, maps, models, computer files, surveys, notes, PGCC 1-21-26
4 and other documents prepared by CONSULTANT in the course of providing the Services under this Agreement.
10. RECORD AUDIT
In accordance with Government Code, Section 8546.7, for expenditures of greater than $10,000, records of both City and CONSULTANT shall be subject to examination and audit by the Auditor General for a period of three (3) years after final payment.
11. INDEMNIFICATION AND DEFENSE
Indemnity
To the fullest extent permitted by law, CONSULTANT shall indemnify and hold harmless City and any and all of its officers, employees and agents (“Indemnified Parties”) from and against any and all losses, liabilities, damages, costs and expenses, including legal counsel’s fees and costs, caused in whole or in part by the negligent or wrongful act, error or omission of CONSULTANT, its officers, agents, employees or subconsultants (or any City or individual that CONSULTANT shall bear the legal liability thereof) in the performance of Services under this Agreement. CONSULTANT’s duty to indemnify and hold harmless City shall not extend to the City’s sole or active negligence.
Duty to defend
In the event City, its officers, employees, agents and/or volunteers are made a party to any action, lawsuit, or other adversarial proceeding arising from the performance of the Services encompassed by this Agreement, and upon demand by City, CONSULTANT shall defend City at CONSULTANT’s cost or at City’s option, to reimburse City for its costs of defense, including reasonable attorney’s fees and costs incurred in the defense of such matters to the extent the matters arise from, relate to or are caused by CONSULTANT’s negligent acts, errors or omissions. Payment by City is not a condition precedent to enforcement of this indemnity. In the event of any dispute between CONSULTANT and City, as to whether liability arises from the sole or active negligence of the City or its officers, employees, or agents, CONSULTANT will be obligated to pay for City’s defense until such time as a final judgment has been entered adjudicating the City as solely or actively negligent. CONSULTANT will not be entitled in the absence of such a determination to any reimbursement of defense costs including but not limited to attorney’s fees, expert fees and costs of litigation.
12. INSURANCE
CONSULTANT shall maintain prior to the beginning of and for the duration of this Agreement insurance coverage as specified in Exhibit C attached to and part of this Agreement.
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5 13. INDEPENDENT CONSULTANT
a. CONSULTANT is and shall at all times remain as to City a wholly independent consultant and/or independent contractor. The personnel performing the Services under this Agreement on behalf of CONSULTANT shall at all times be under CONSULTANT’s exclusive direction and control. Neither City nor any of its officers, employees, or agents shall have control over the conduct of CONSULTANT or any of CONSULTANT’s officers, employees, or agents, except as set forth in this Agreement.
CONSULTANT shall not at any time or in any manner represent that it or any of its officers, employees, or agents are in any manner officers, employees, or agents of City.
CONSULTANT shall not incur or have the power to incur any debt, obligation, or liability whatever against City, or bind City in any manner. b. No employee benefits shall be available to CONSULTANT in connection with the performance of this Agreement. Except for the fees paid to CONSULTANT as provided in the Agreement, City shall not pay salaries, wages, or other compensation to CONSULTANT for performing Services hereunder for City. City shall not be liable for compensation or indemnification to CONSULTANT for injury or sickness arising out of performing Services hereunder.
14. LEGAL RESPONSIBILITIES
CONSULTANT shall keep itself informed of State and Federal laws and regulations that in any manner affect those employed by it or in any way affect the performance of its Services pursuant to this Agreement. CONSULTANT shall at all times observe and comply with all such laws and regulations. City, and its officers, employees, and agents shall not be liable at law or in equity occasioned by failure of the CONSULTANT to comply with this Section.
15. UNDUE INFLUENCE
CONSULTANT declares and warrants that no undue influence or pressure was used against or in concert with any officer, employee or agent of City in connection with the award, terms or implementation of this Agreement, including any method of coercion, confidential financial arrangement, or financial inducement. No officer, employee or agent of City has or will receive compensation, directly or indirectly, from CONSULTANT, or from any officer, employee or agent of CONSULTANT, in connection with the award of this Agreement or any Services to be performed as a result of this Agreement. Violation of this Section shall be a material breach of this Agreement entitling City to any and all remedies at law or in equity.
16. NO BENEFIT TO ARISE TO CITY OFFICERS AND EMPLOYEES
No officer, employee of City, or their designees or agents, and no public official who exercises authority over or responsibilities with respect to the Services performed under the Agreement during their tenure or for one year thereafter, shall have any interest, direct or indirect, in any agreement or sub-agreement, or the proceeds thereof, for work to be performed in connection with the Services performed under this Agreement.
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6 17. RELEASE OF INFORMATION/CONFLICTS OF INTEREST
a. All information gained by CONSULTANT in performance of this Agreement shall be considered confidential and shall not be released by CONSULTANT without City’s prior written authorization. CONSULTANT, its officers, employees, agents, or subconsultants, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories, or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered “voluntary” provided CONSULTANT gives City notice of such court order or subpoena.
b. CONSULTANT shall promptly notify CITY should CONSULTANT, its officers, employees, agents, or subconsultants be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions, or other discovery request (“Discovery”), court order, or subpoena from any person or party regarding this Agreement and the work performed there under or with respect to any project or property located within the City, unless City is a party to any lawsuit, arbitration, or administrative proceeding connected to such Discovery, or unless CONSULTANT is prohibited by law from informing City of such Discovery.
City retains the right, but has no obligation, to represent CONSULTANT and/or be present at any deposition, hearing, or similar proceeding as allowed by law. Unless City is a party to the lawsuit, arbitration, or administrative proceeding and is adverse to CONSULTANT in such proceeding, CONSULTANT agrees to cooperate fully with City and to provide the opportunity to review any response to discovery requests provided by CONSULTANT. However, City’s right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. c. If City determines CONTRACTOR comes within the definition of Contractor under the Political Reform Act (Government Code §87100 et seq.), CONTRACTOR shall complete and file and shall require any other person doing Work under this Agreement to complete and file a “Statement of Economic Interest” with CITY disclosing CONTRACTOR’s and/or such other person’s financial interests.
18. DISCRIMINATION
CONSULTANT agrees that in the performance of this Agreement, neither CONSULTANT nor any person acting on CONSULTANT’s behalf shall discriminate against any person on the basis of race, religious creed, color, national origin, ancestry, disability, medical condition, genetic information, marital status, sexual orientation, sex, gender identity, gender expression, military or veteran status or age.
19. NOTICES
Any notices which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable PGCC 1-21-26
7 document delivery service, such as but not limited to, Federal Express, which provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, by first class mail, addressed to the address of the party as set forth below or at any other address as that party may later designate by notice:
To City: Matthew Mogensen
City of Pacific Grove
300 Forest Avenue
Pacific Grove, CA 93950
Attention: City Clerk
To CONSULTANT: David Tick
Props & Measures
1569 Solano Avenue, #493
Berkeley, CA. 94707
Notice is effective on the date of personal service, or 5 days following deposit in a United States mailbox, or date of postmark. The parties may agree to service by email.
20. THIRD PARTY BENEFICIARIES
Nothing contained in this Agreement shall be construed to create, and the parties do not intend to create, any rights in third parties.
21. ASSIGNMENT
CONSULTANT shall not assign the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without prior written consent of CITY. Because of the personal nature of the Services to be rendered pursuant to this Agreement, only CONSULTANT shall perform the Services described in this Agreement. CONSULTANT may use assistants, under their direct supervision, to perform some of the Services under this Agreement.
22. LICENSES
At all times during the term of this Agreement, CONSULTANT shall have in full force and effect, all licenses required of it by law for the performance of the Services described in this Agreement. CONSULTANT shall obtain a valid City Business License and shall maintain said Business License for the term of this Agreement and any extensions.
23. GOVERNING LAW
City and CONSULTANT understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in Monterey County, or federal district court with jurisdiction over City.
CONSULTANT agrees not to commence or prosecute any dispute arising out of or in PGCC 1-21-26
8 connection with this Agreement other than in the aforementioned courts and irrevocably consents to the exclusive personal jurisdiction and venue of the aforementioned courts.
24. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties relating to their obligations described in this Agreement. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written and pertaining to the subject of this Agreement or with respect to the terms and conditions of this Agreement, are merged into this Agreement and shall be of no further force or effect. Each party is entering into this Agreement based solely upon the representations set forth herein and upon each party’s own independent investigation of any and all facts such party deems material. No amendment shall be valid unless in writing, executed by both parties.
25. DISPUTE RESOLUTION; ATTORNEY’S FEES
CONSULTANT shall continue to perform under this Agreement during any dispute.
CONSULTANT and City hereby agree to make good faith efforts to resolve disputes as quickly as possible. In the event any dispute arising from or related to this Agreement results in litigation or arbitration, the prevailing party shall be entitled to recover all reasonable costs incurred, including court costs, attorney fees, expenses for expert witnesses (whether or not called to testify), expenses for accountants or appraisers (whether or not called to testify), and other related expenses. Recovery of these expenses shall be as additional costs awarded to the prevailing party, and shall not require initiation of a separate legal proceeding.
26. WORK SCHEDULED/TIME OF COMPLETION
City and CONSULTANT agree that time is of the essence in this Agreement.
27. AUTHORITY TO EXECUTE THIS AGREEMENT
The person or persons executing this Agreement on behalf of CONSULTANT warrants and represents that they have the authority to execute this Agreement on behalf of the CONSULTANT and have the authority to bind CONSULTANT to the performance of its obligations hereunder.
28. INTERPRETATION OF CONFLICTING PROVISIONS
In the event of any conflict or inconsistency between the provisions of this Agreement and the Provisions of any exhibit or other attachment to this Agreement, the provisions of this Agreement shall prevail and control.
29. SEVERABILITY
If any term of this Agreement is held invalid by a court of competent jurisdiction or arbitrator the remainder of this Agreement shall remain in effect.
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9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written.
CITY OF PACIFIC GROVE CONSULTANT
By:
Risk Manager
Date:
By: By:
Department Director Consultant
Date: Date:
By: ___________________________ By: ____________________________ City Manager or Mayor City Administrative Services Department Date: ___________________________ Date: ___________________________ Approved As To Form:
City Attorney
_______________________________ Date
Attachments: Exhibit A Scope of Services
Exhibit B Payment Schedule
Exhibit C Insurance Requirements
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Professional Services Agreement
07.19.2022
EXHIBIT A
SCOPE OF SERVICES
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True North Research, Inc. © 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
R E S E A R C H P R O P O S A L
True North Research (True North) is pleased to present this proposal to provide voter opinion research and revenue measure consulting services to the City of Pacific Grove (City). Based on our discussions with Props & Measures and our experience designing hundreds of similar surveys for California cities, True North understands that the City is interested in using the survey to produce an unbiased, statistically reliable evaluation of voters' interest in funding city services with a local revenue measure, as well as identify how to structure a measure so that it is well-aligned with the electorates priorit ies and sensit ivities. In short, the goal is to assess the feasibility of placing a revenue measure on the November 2026 ballot andif feasibledetermine how best to package a measure for voter approval.
SCOPE OF WORK The scope of services that we propose to perform for the City includes all tasks associated with designing, conducting and analyzing the survey, as well as presenting the results. Briefly, the scope of services includes: Meet with the City to thoroughly discuss the research objectives and methodology for the study, as well as discuss potential challenges, concerns, and issues that may surround the study. Develop a stratified and clustered sample of voters whobased on their voting history and registration statusare likely to participate in the elect ion of interest (November 2026) on the natural or through targeted outreach efforts. Develop a draft questionnaire for the Citys review and make revisions as needed until all parties approve of the instrument. Pre-test the survey instrument to ensure its integrity. CATI (Computer Assisted Telephone Interviewing) program the finalized survey instrument to ensure accurate and reliable data collection using live telephone interviewers. Web program the same survey instrument to allow for secure, password-protected online survey participation and data collection. Recruit part icipation in the survey using a combinat ion of email, text messages, and telephone calls. Complete at least 250 quality interviews according to the sampling plan and a strict interviewing protocol. Any interviews collected beyond 250 will be provided to the City at no additional cost. It is expect that the average interview will last between 15 to 17 minutes. Process the data, which includes conducting validity checks, cleaning, recoding, coding open-end responses, and adjusting for strategic oversampling (if used) through a statist ical procedure known as weight ing. Prepare an initial topline summary which presents the overall findings of the survey. Prepare a thorough report on the findings, including a detailed quest ion-by-quest ion analysis, description of the methodology, an executive summary of the key findings and conclusions/recommendations, as well as a comprehensive set of crosstabulations showing how the answers varied by subgroups of voters. The report will include PGCC 1-21-26
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True North Research, Inc. © 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 extensive full-color graphics displaying the findings, as well as insightful narrative discussion of the results and their implications. Prepare an electronic copy of the final report to allow the City to reproduce the report as needed. Prepare a PowerPoint presentation of the results and present the results to the City via Zoom or similar platform. Be available to assist and provide advice to the City after the survey is complete.
TIME LINE True North will work with the City to establish a project schedule that meets the Citys needs. Figure 1 below presents a typical t ime line for a voter survey that shows the stages of a survey project, the number of days that we recommend devoting to each stage, as well as the key research tasks that are completed in each stage. We have the flexibility and resources to adjust this time line if the City desires, and we can apply this t ime line to any start date set by the City.
FIGURE 1 PROPOSED TIME LINE
COSTS True Norths fixed-fee cost estimate to design and conduct the baseline survey as described in this proposal is $28,650. If advised and approved by the City, the costs for a subsequent tracking survey will be $27,200. These costs are inclusive of all tasks and deliverables, with the exception of travel time and expenses (if needed).
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True North Research, Inc. © 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A B O U T T R U E N O R T H
True North is a full-service survey research firm that is dedicated to providing California municipalit ies and public agencies with a clear understanding of the opinions, perceptions, priorities and behaviors of their residents and voters.
Through designing and implement ing scientific surveys, focus groups and one-on-one interviews, as well as expert interpretation of the findings, True North helps its clients to move with confidence when making strategic decisions in a variety of areassuch as performance measurement, planning, budgeting, revenue enhancement, and developing effect ive public engagement/communications strategies.
As specialists in research methodology and the public sector, our clients span the full range of public agencies including cit ies, counties, special districts, utilities, councils of government, educational inst itutions, state agencies, and federal agencies. The diversity of our public sector clientele has enabled us to perform research at the local, regional, state, national, and international levels.
COMPANY SPECIFICS True North Research was co-founded in 2002 as a two-person survey consult ing firm by Dr.
McLarney and Mr. Sarles and is a certified Small Business Enterprise (SBE) and S-Corporation in good standing with the State of California. Although we have had many opportunities to expand our business during the past 23 years, we have chosen to maintain True North as a two-person research team. Dr. McLarney and Mr. Sarles still manage every aspect of every True North project. We are an extremely efficient, collaborat ive team of twoand we have chosen to keep it that way so that our clients continue to receive exceptionally high quality customer service and research insights.
REVENUE MEASURE EXPERIENCE Creat ing revenue measures that are ultimately approved by the necessary percentage of voters is difficult, especially in the State of California. Successful measures require insightful research and sound, strategic advice. One testimony to the accuracy of our research and the reliability of our strategic advice is that we have the highest verifiable success rate in the State of California for revenue measures over the past decade (93%), and a 100% success rate in seven of the past ten election cycles. To date, we have helped our clients raise over $42 bill ion in voter approved revenue measures, including more than $7 billion in the past year alone (2024). Our experience includes all types of revenue measures including general and special sales taxes (transactions & use taxes), parcel taxes, bonds, transient occupancy taxes, utility users taxes, real estate transfer taxes, business licence taxes, benefit assessments, and property-related fees.
MUNICIPAL CLIENTS During their careers, Dr. McLarney and Mr. Sarles have designed and conducted more than 500 surveys for California municipalit ies to help them ident ify community priorities with respect to city services and facilit ies, as well as ident ify how best to plan for and invest in service, facility, and infrastructure improvements. Below is a list of the California municipalities for which Dr. McLarney and Mr. Sarles have personally designed and conducted community and voter surveys. Its worth nothing that many of these municipalities have selected True North as their research partner for multiple surveys, with repeated engagements spanning more than two decades.
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True North Research, Inc. © 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 TRUE NORTHS MUNICIPAL CLIENTS Agoura Hills Cypress Lake Elsinore Rocklin Alhambra Dana Point Lake Forest San Anselmo
Aliso Viejo Del Mar Lathrop San Carlos
Anaheim Diamond Bar Lemon Grove San Clemente
Apple Valley East Palo Alto Lompoc San Diego
Arroyo Grande Eastvale Long Beach San Dimas
Atascadero El Cajon Los Angeles San Gabriel
Atherton Encinitas Los Gatos San Jose
Azusa Escondido Madera San Luis Obispo
Baldwin Park Folsom Malibu San Marcos
Banning Fontana Manhattan Beach San Marino
Barstow Fremont Menifee San Mateo
Belvedere Gilroy Mission Viejo Santa Barbara
Beverly Hills Glendale Modesto Santa Clarita
Big Bear Lake Glendora Moorpark Santa Monica
Brea Goleta Murrieta Signal Hill
Buellton Grand Terrace Norwalk Solana Beach
Buena Park Half Moon Bay Oceanside South Lake Tahoe
Burbank Hemet Oxnard South Pasadena
Campbell Hesperia Palmdale Temecula
Carlsbad Huntington Beach Petaluma Thousand Oaks
Cerritos Indian Wells Pico Rivera Truckee
Chino Irvine Placentia Upland
Chula Vista Kerman Port Hueneme Ventura
Claremont La Canada-Flintridge Rancho Cucamonga Watsonville Clayton La Mesa Rancho Palos Verdes West Hollywood
Commerce La Palma Rancho Santa Margarita Westlake Village Coronado La Verne Redlands Whittier
Costa Mesa Laguna Beach Redondo Beach Yorba Linda
Cudahy Laguna Niguel Riverside Yucca Valley
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True North Research, Inc. © 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 P R O J E C T T E A M Most research firms manage survey projects through division of labor and a lot of delegation. Although the Principals may appear for the interview and for client meetings, their involvement beyond that point is generally negligible. The Project Managers role is to be the point of contact and help design the study, but even they only handle about 20% of the workload. The unfortunate reality is that most of the important research tasksdata processing, data analysis, report writ ing, presentation building are delegated to junior-level staff. And the bigger the firm, the more projects they manage, the more they rely on junior staff to get the work done.
We do things differently at True North. We believe the best approach to research is to have the person with the most experience and expertise in the firm roll up their sleeves and actually do the work. Dr.
McLarney will not only serve as the Project Manager and the day-to-day contact for the City, he will personally perform about 70% of the research tasks including all survey design, analysis, report writing, and presentat ions. We have purposely kept True North as a single office, two-person research team because of our commitment to this project management model and the many benefits it provides to our clients.
Our approach to managing projects is one of the things that makes True North unique, as every task of your study will be performed by a highly-trained principal with 25+ years of experience. Put another way: You don't need to pick up the phone to get the attention of our principals - we are there with you at every step, doing (not delegating) the research.
PROJECT ORGANIZATION True North Research will serve as prime contractor at the direct ion of the City of Pacific Grove. As shown in the figure to the right, Dr. Timothy McLarney (President of True North) will be the Project Manager for the study and will perform all key design, analysis, and reporting tasks. Richard Sarles (Principal Researcher at True North) will assist with programming, testing, data processing, quality control, and graphics production. The telephone and online interviews will be conducted by the same high quality, professional data collection firm (Dynata) that True North has teamed with to complete more than 1,000 community and voter opinion surveys.
RESUMES & ROLES For the Citys reference, the following paragraphs provide additional information about Dr. McLarneys and Mr. Sarles respective roles on this project, as well as their education and research backgrounds. Dr. McLarney and Mr. Sarles are committed to working with the City of Pacific Grove for the durat ion of this projectthere will be no staff turnover, subst itut ions, or changes.
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True North Research, Inc. © 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PROJECT MANAGER Timothy McLarney, Ph.D., will serve as the Project Manager for the proposed survey and will be the Citys point of contact on all matters related to the study. Dr. McLarney will lead all design, analysis, reporting and presentation tasks. Approximately 70% of the research tasks will be performed directly by Dr. McLarney.
Dr. McLarney has more than 25 years of experience in survey methodology, statistics, public opinion analysis, and providing data-driven strategic advice to public agencies. During his career, he has occupied a lead role in over 1,500 research studies, including more than 500 revenue measure feasibility surveys. To date, Dr. McLarneys research has led to over $42 billion in voter-approved revenue measures at the local level in California.
Dr. McLarney is a nationally recognized expert in survey research methodology, sampling theory, weighting, and the use of statistical methods to generalize survey results. His research has been published in academic journals and has earned him honors including the Andrew Mellon Fellowship (Cornell University), Sage Fellowship (Cornell University), and the title of Visit ing Scholar at the Institute of Governmental Studies at UC Berkeley. He has also served as an independent expert witness in survey research methodology for California legal cases.
Dr. McLarney earned his Ph.D. and M.A. in Government from Cornell University with an emphasis in survey methodology, sampling theory, data science, and public opinion analysis, as well as a Bachelor's degree in Politics from UC Santa Cruz.
PRINCIPAL RESEARCHER Richard Sarles, M.S., will assist Dr. McLarney with managing data collection, data processing, quality control, and graphics production. As Principal Researcher and co-founder of True North Research, Mr.
Sarles has more than 25 years of expert ise in survey research and data science, specializing in database management, sampling methodology, stat istical analysis, and results interpretation. Throughout his career, Mr. Sarles has proven to be except ional in transforming complex data sets into actionable insights that drive strategic decision-making. With experience spanning over 1,500 research studies, he has collaborated with local, state, and federal government agencies, Fortune 500 companies, and nonprofit organizat ions, delivering valuable, data-driven guidance across diverse sectors.
Before co-founding True North Research, Mr. Sarles served as the Associate Research Director at another west-coast research firm. A published author, his work has been cited in sociological, psychological, and industry-specific journals.
Mr. Sarles holds an M.S. in Experimental Psychology with an emphasis in stat istics from Illinois State University, where he graduated magna cum laude, as well as a B.S. in Psychology from the same institution, where he achieved summa cum laude honors.
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Renewable Guard Insurance Brokers, LLC
155 Montgomery Street
Suite 507
San Francisco CA 94104
Kate Cote
(800) 267-0311
[email protected]
Terris Barnes Walters Boigon Heath Lester Inc, DBA: CleanSweep 1569 Solanoa Ave
#93
Berkeley CA 94707
Hanover Fire & Casualty Ins Co
Hiscox Insurance Company 10200
CL25111302620
A Y OBF-D431868-10 10/01/2025 10/01/2026
2,000,000
300,000
10,000
4,000,000
4,000,000
Y OBF-D431868-10 10/01/2025 10/01/2026
1,000,000
1,000,000
Products - Comp/ Op 1,000,000
A Y W2F-D361933-10 10/01/2025 10/01/2026
1,000,000
1,000,000
1,000,000
B
Errors and Omissions
Y US UUA 2630235.25 10/01/2025 10/01/2026
Each Occurence 1,000,000
General Aggregate 2,000,000
City of Pacific Grove and its officers, employees, agents, and volunteers shall be additional insureds under such policies when required by a written contract. Primary Non-Contributory. Waiver of Subrogation is applicable.
City of Pacific Grove
300 Forest Ave
Pacific Grove CA 93950
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.
INSURER(S) AFFORDING COVERAGE
INSURER F :
INSURER E :
INSURER D :
INSURER C :
INSURER B :
INSURER A : NAIC # NAME: CONTACT
(A/C, No): FAX
E-MAIL ADDRESS: PRODUCER
(A/C, No, Ext): PHONE
INSURED
COVERAGES CERTIFICATE NUMBER: REVISION NUMBER:
IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed.
If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.
OTHER: (Per accident)
(Ea accident)
$
$ N / A
SUBR WVDADDL
INSD
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. $
$
$
$ PROPERTY DAMAGE
BODILY INJURY (Per accident)
BODILY INJURY (Per person) COMBINED SINGLE LIMIT AUTOS ONLY
AUTOS ONLY AUTOS NON-OWNED OWNED SCHEDULED
ANY AUTO
AUTOMOBILE LIABILITY
Y / N WORKERS COMPENSATION
AND EMPLOYERS' LIABILITY OFFICER/MEMBER EXCLUDED?
(Mandatory in NH) DESCRIPTION OF OPERATIONS below
If yes, describe under ANY PROPRIETOR/PARTNER/EXECUTIVE $
$
$ E.L. DISEASE - POLICY LIMIT E.L. DISEASE - EA EMPLOYEEE.L. EACH ACCIDENT EROTH- STATUTE PER
(MM/DD/YYYY) LIMITS POLICY EXP(MM/DD/YYYY) POLICY EFFLTR TYPE OF INSURANCE POLICY NUMBER INSR
DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) EXCESS LIAB UMBRELLA LIAB EACH OCCURRENCE $ AGGREGATE $
$ OCCUR
CLAIMS-MADE DED RETENTION $ PRODUCTS - COMP/OP AGG $ GENERAL AGGREGATE $ PERSONAL & ADV INJURY $ MED EXP (Any one person) $ EACH OCCURRENCE $ DAMAGE TO RENTED PREMISES (Ea occurrence) $ COMMERCIAL GENERAL LIABILITY CLAIMS-MADE OCCUR GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO- JECT LOC
CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY)
CANCELLATION
AUTHORIZED REPRESENTATIVE ACORD 25 (2016/03)
© 1988-2015 ACORD CORPORATION. All rights reserved.
CERTIFICATE HOLDER
The ACORD name and logo are registered marks of ACORD
HIRED
AUTOS ONLY
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EXHIBIT B
PAYMENT SCHEDULE
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EXHIBIT B
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EXHIBIT C
INSURANCE
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EXHIBIT C
INSURANCE REQUIREMENTS
Without limiting CONSULTANT’s indemnification of City, and prior to commencement of Work, CONSULTANT shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form satisfactory to City.
General liability insurance. CONSULTANT shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than $1,000,000 per occurrence, $2,000,000 general aggregate, for bodily injury, personal injury, and property damage. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insured contract” language will not be accepted.
Automobile liability insurance. CONSULTANT shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non-owned or rented vehicles, in an amount not less than $1,000,000 combined single limit for each accident.
Professional liability (errors & omissions) insurance. CONSULTANT shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of $1,000,000 per claim and in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the effective date of this Agreement and CONSULTANT agrees to maintain continuous coverage through a period no less than three (3) years after completion of the Services required by this Agreement.
Workers’ compensation insurance. CONSULTANT shall maintain Workers’ Compensation Insurance (Statutory Limits) and Employer’s Liability Insurance (with limits of at least $1,000,000).
CONSULTANT shall submit to CITY, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of CITY, its officers, agents, employees and volunteers.
Umbrella or excess liability insurance. CONSULTANT shall obtain and maintain an umbrella or excess liability insurance policy with limits that will provide bodily injury, personal injury and property damage liability coverage at least as broad as the primary coverages set forth above, including commercial general liability, automobile liability, and employer’s liability. Such policy or policies shall include the following terms and conditions:
A drop down feature requiring the policy to respond if any primary insurance that would otherwise have applied proves to be uncollectible in whole or in part for any reason;
Pay on behalf of wording as opposed to reimbursement;
Concurrency of effective dates with primary policies;
Policies shall “follow form” to the underlying primary policies; and
EXHIBIT C
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Insureds under primary policies shall also be insureds under the umbrella or excess policies.
Other provisions or requirements
Proof of insurance. CONSULTANT shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers’ compensation. Insurance certificates and endorsements must be approved by City’s Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this contract. City reserves the right to require complete, certified copies of all required insurance policies, at any time.
Duration of coverage. CONSULTANT shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the Work hereunder by CONSULTANT, his agents, representatives, employees or subconsultants.
Primary/noncontributing. Coverage provided by CONSULTANT shall be primary and any insurance or self-insurance procured or maintained by City shall not be required to contribute with it. The limits of insurance required herein may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of City before the City’s own insurance or self-insurance shall be called upon to protect it as a named insured.
City’s rights of enforcement. In the event any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by CONSULTANT or City will withhold amounts sufficient to pay premium from CONSULTANT payments. In the alternative, City may cancel this Agreement.
Acceptable insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance or is on the List of Approved Surplus Line Insurers in the State of California, with an assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VI (or larger) in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by the City’s Risk Manager.
Waiver of subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against CITY, its elected or appointed officers, agents, employees and volunteers or shall specifically allow CONSULTANT or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss.
CONSULTANT hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants.
Enforcement of contract provisions (non estoppel). CONSULTANT acknowledges and agrees that any actual or alleged failure on the part of the City to inform CONSULTANT of non-compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder.
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Requirements not limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Consultant maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.
Notice of cancellation. Consultant agrees to oblige its insurance agent or broker and insurers to provide to CITY with a thirty (30) day notice of cancellation (except for nonpayment for which a ten (10) day notice is required) or nonrenewal of coverage for each required coverage.
Additional insured status. General liability policies shall provide or be endorsed to provide that City and its officers, employees, agents, and volunteers shall be additional insureds under such policies. This provision shall also apply to any excess/umbrella liability policies.
Prohibition of undisclosed coverage limitations. None of the coverages required herein will be in compliance with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing.
Separation of insureds. A severability of interests provision must apply for all additional insureds ensuring that Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the insurer’s limits of liability. The policy(ies) shall not contain any cross-liability exclusions.
Pass through clause. CONSULTANT agrees to ensure that its subconsultants, subcontractors, and any other party involved with the project who is brought onto or involved in the project by CONSULTANT, provide the same minimum insurance coverage and endorsements required of CONSULTANT.
CONSULTANT agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section.
CONSULTANT agrees that upon request, all agreements with consultants, subcontractors, and others engaged in the project will be submitted to City for review.
City’s right to revise specifications. The City reserves the right at any time during the term of the contract to change the amounts and types of insurance required by giving the CONSULTANT ninety (90) days advance written notice of such change. If such change results in substantial additional cost to the CONSULTANT, the City and CONSULTANT may renegotiate CONSULTANT’s compensation.
Self-insured retentions. Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these specifications unless approved by City.
Timely notice of claims. CONSULTANT shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from CONSULTANT’s performance under this Agreement, and that involve or may involve coverage under any of the required liability policies.
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Additional insurance. CONSULTANT shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work.
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Agenda No. 13 A
CITY OF PACIFIC GROVE
300 Forest Avenue, Pacific Grove, California 93950
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Gho, Public Works Director/Deputy City Manager MEETING DATE: January 21, 2026
SUBJECT: Chautauqua Hall Architectural Award and Funding Agreement CEQA: Does not constitute a Project per California Environmental Quality Act Guidelines Section 15378
RECOMMENDATION
Enter into an agreement with Hunter Porter Eldridge Architecture for Chautauqua Hall Architectural Services in an amount not to exceed $176,608 plus a 10% contingency.
1. Authorize the execution of a funding agreement between the Heritage Society of Pacific Grove and the City for the reimbursement for Architectural Services for Chautauqua Hall.
2. 3. Alternatively, discuss and take other action related to this item.
DISCUSSION
The Pacific Grove Retreat Association built Chautauqua Hall in 1881 as a chapel, meeting hall, schoolhouse, and tent storage facility for the annual summer meeting attendees. Acquired by the City in 1922, it has served as a Boy Scout headquarters, recreation center, dance hall, and an important community meeting space.
Chautauqua was an adult education movement that began in the late 19th century near Lake Chautauqua in New York. The movement provided a variety of educational, cultural, and religious activities, including lectures, concerts, and classes. In 1875, the oceanfront setting of today’s Pacific Grove hosted the first Chautauqua of the West, a year that is now recognized as the community’s founding. In 1970, Chautauqua Hall was listed as California Registered Historical Landmark No. 839.
Chautauqua Hall is a wood-framed structure measuring 112 feet by 50 feet and located at 162 Sixteenth Street on the corner of Central Avenue. The main hall’s interior is two stories high, with two single-story multi-purpose rooms opening onto Seventeenth Street at the west end. A kitchen, bathrooms, and a mezzanine area are located between the meeting spaces.
To preserve its significance as a California Registered Historical Landmark and ensure its continued role as an important community cultural and event center, the City engaged Wiss, Janney, Elstner Associates, Inc. (WJE) to prepare a building assessment of Chautauqua Hall, which can be found here.
The report, delivered in January 2024, provides guidance for planning maintenance and future use.
Following a review of the WJE report, the City of Pacific Grove and the Heritage Society quickly identified the need for maintenance and upgrades to the hall, with a primary focus on preservation. The PGCC 1-21-26
identified the need for maintenance and upgrades to the hall, with a primary focus on preservation. The Heritage Society launched a very successful fundraising campaign, which has already harnessed over $700,000 that will be used towards the Chautauqua Hall restoration. To utilize these donated funds, the City and Heritage Society have agreed upon a reimbursement agreement, attachment 1, that will be used for architectural/design services. The City will oversee the design of the project and request reimbursements from the Heritage Society per the funding agreement. For the construction of the project, an amendment to the reimbursement agreement will be drafted based on received construction cost. It is anticipated that this amendment will be presented when the City and Friends of Chautauqua Hall request award of bid for construction to the City Council.
The first step in the restoration process of Chautauqua Hall is to develop a set of plans that can be harnessed to solicit contractors and ultimately construct the improvements. In June of 2025, the City released a Request for Proposals, soliciting proposals from qualified architectural firms to develop the design, improvements and provide cost estimates for the restoration of the historic Chautauqua Hall.
On August 7, 2025 the City received 6 proposals from the following firms:
1. Wald, Runke and Dost
2. Hunter Porter Eldridge
3. Goring & Straja Architecture
4. Ronald Brown Architecture
5. Page and Turnbull
6. Garavaglia
The City, along with members of the Heritage Society, reviewed the received proposal and scored them based on the firm's approach, schedule, experience, staffing, and cost. We opted to interview three firms that the review team determined would be a good fit for the Chautauqua Hall project. On September 19, 2025, the team conducted interviews of the short listed firms and selected Hunter Porter Eldridge Architectural as our top candidate.
Hunter provided the City with a proposal and developed a team that will meet all the requirements outlined in the RFP scope. His team includes the following:
Discipline Firm Description of Services
Architecture
Hunter Porter
Eldridge
Architecture
Provide Architectural services
and led the project. Package up
the plan set and specifications
for bid distribution
Landscape
Architecture
Oona Johnson
Landscape
Architecture
Develop the outdoor spaces and
landscaping plan sets for the
project
Kitchen Consultant Patrick Stein
Will review the kitchen layout
and provide kitchen design plan
sets with equipment, layout, and
service area
ADA Consultant Eagle Project
Management
Review existing conditions and
provide consultation during
design
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Mechanical/Plumbing Cole Briet
Engineering
HVAC, plumbing (domestic,
wastewater, gas), and electrical
engineering plan sets
Structural
Mayone
Structural
Engineering
Review of existing structure and
supports, and provide plan sets
for necessary improvements
A/V Media Systems
Group
Audio and visual design. Will
review and prepare a plan set for
equipment purchases and
installation
As Hunter and his team develop plans for the project, the Friends of Chautauqua Hall and the City of Pacific Grove will meet with him and his team to ensure our goals for Chautauqua Hall are being met, and the vision of the project is being transcribed into the plan set that is being developed.
Hunter Porter Eldridge Architecture and his team have provided the City with a proposal to design, plan, and prepare a construction bidding package for the Chautauqua Hall Restoration Project for an amount of $176,608.
OPTIONS
1. Do not approve the funding agreement.
2. Do not approve an agreement with Hunter Porter Eldridge Architectural.
FINANCIAL IMPACT:
All funding for the Architectural Services for the Chautauqua Hall Restoration Project will be derived from donations and reimbursed to the City through the Funding Agreement between the Heritage Society of Pacific Grove and the City.
FOCUSED PRIORITY AREA: Infrastructure
Attachments
Funding Agreement
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AGREEMENT BETWEEN THE CITY OF PACIFIC GROVE,
AND
THE HERITAGE SOCIETY OF PACIFIC GROVE
This Agreement (“Agreement”) is made as of this ____ day of ______________, 2026, by and between the City of Pacific Grove, a political subdivision of the State of California (the “City”), and the Heritage Society of Pacific Grove (Society);
WHEREAS, Chautauqua Hall, located at 162 16th Street in Pacific Grove, California, is a historic wood-framed community meeting hall built in 1881; WHEREAS, Chautauqua Hall, was listed in 1970 as a California Registered Historical Landmark No. 839 and is currently owned and managed by the City of Pacific Grove and rented out for classes, events, and used by the Boy Scouts;
WHEREAS, the Society is an Internal Revenue Code Section 501(c)(3) tax-exempt (EIN 94-2346852) organization formed to raise funds and encourage the preservation and restoration of the buildings that contribute to the beauty and unique character of Pacific Grove; WHEREAS, the Society was formed in 1975 to foster an appreciation of the city’s historical and architectural resources through preservation activities and public education; WHEREAS, in September of 2024, the Society began a fundraising campaign to support the restoration of Chautauqua Hall;
WHEREAS, the City paid for and initiated a building assessment of Chautauqua Hall, which was completed in January of 2024, that will be the guiding project for plan development (“Project”);
WHEREAS, the Society has a goal of $1,000,000 that will be used towards the restoration of the Chautauqua Hall Project;
WHEREAS, through this Agreement, the Society will reimburse the City for work/invoices that have been paid by the City for the architectural design of the project and will also reimburse for the construction contractor performing the work;
WHEREAS, upon completion of the improvements to Chautauqua Hall, the City shall maintain the building for continued community use;
WHEREAS, the Society will have no obligation to perform long term maintenance once the restoration Project is completed;
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NOW, THEREFORE, in consideration of the mutual covenants contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
1. THE CITY’S OBLIGATIONS
A. The City shall use its best efforts to ensure that the contractors or other third parties performing services for or relating to the Renewal Project (the “Contractor(s)”) shall submit invoices to City on a regular and timely basis, and, whenever possible, not less than on a monthly basis.
B. The City will issue a Request for Proposal (RFP) for design services for the Project. Upon receipt of the responses to the RFP, the City will select the preferred design firm (“Design Firm”). Prior to entering into a contract with the Design Firm, the City will provide to the Society the proposal from the Design Firm and request the Society to make a deposit of 10% with the City for the services of the Design Firm (“Deposit”) to establish a reimbursement account. The City shall pay the Design Firm from the Deposit and will provide to the Society copies of the invoices from the Design Firm and a record of the payments made by the City to the Design Firm for future reimbursements.
C. The City shall be solely responsible for ensuring that all Contractor invoices are correct and accurately reflect the work completed for (or to be completed) or related to, the Renewal Project.
D. The City shall be solely responsible for ensuring that the invoices paid by the City are for work completed to the City’s satisfaction.
E. For the costs of the construction of the Project, the City shall pay invoices approved by it, and shall notify the Society of the invoices paid by it for which it desires reimbursement from the Society on a monthly basis (each a “Monthly Reimbursement Request”), with such Monthly Reimbursement Request to include the name(s) of the Contractors paid and a brief description of the work performed by each Contractor. The City shall provide copies of the contractor invoices or other supporting documentation with respect to its Monthly Reimbursement Requests.
2. THE SOCIETY’S OBLIGATIONS:
A. The Society shall reimburse the City on a monthly basis with respect to all Monthly Reimbursement Requests submitted as to work completed and paid for by the City during the prior month. The Society, as applicable, shall issue a check (or arrange for electronic transfer of funds) within ten (10) business days of the Monthly Reimbursement Request.
B. The City agrees to use Chautauqua Hall Donation funds only for the restoration of Chautauqua Hall, as approved by the Society Board for the amount awarded for the project. The Heritage Society shall reimburse the City, limited to a maximum of $176,608 plus a 10% contingency, for PGCC 1-21-26
Chautauqua Hall restoration activities as described in Exhibit A ‘Chautauqua Hall Design Fees’.
C. Nothing in this Agreement shall give the Society the right to deny or dispute payment of invoices, certify the completion of work on the Project, or otherwise interfere with any City decision pertaining to the Renewal Project. The City shall remain solely responsible for overseeing the Renewal Project and determining whether the work performed has been performed to the City’s satisfaction and whether Contractor invoices are to be paid.
3. INDEMNIFICATION
A. City Indemnification Obligation. The City shall indemnify, defend and hold harmless the Society and such Parties’ officers, directors, agents, employees and volunteers against any loss, cost, damage, expense, claim, suit, demand, or liability of any kind or character, including but not limited to reasonable attorney fees and costs (collectively “Claims or Losses”), arising from or relating to any negligent or wrongful act or omission of the Indemnifying Party, its officers, agents or employees (including, without limitation, its contractors and subcontractors), which occurs in the performance of, or otherwise in connection with, this Agreement and the Chautauqua Hall Restoration Project, including without limitation, all Claims or Losses arising out of or related the City’s failure to pay any contractor or subcontractor for services performed or materials provided in connection with the Chautauqua Hall Restoration Project and all Claims or Losses arising out of any alleged defect in the work performed by the City and its contractors and subcontractors.
B. Society Indemnification Obligation. The Society shall indemnify, defend and hold harmless the City and its officers, agents and employees from and against all Claims or Losses arising out of any alleged negligent act or omission of the Heritage Society in administering or disbursing any funds that were donated or granted to such Parties, including, without limitation, any Claims or Losses asserted by any donor or grantor and any Claims or Losses arising out any alleged breach of fiduciary duty by the officers or directors of the Society in approving the expenditure of funds of the Society.
4. REPORTING
A. The City shall provide quarterly updates to the Society on City Funds remaining for disbursement. The Society shall provide quarterly reports to City with respect to donation funds remaining for disbursement at such time as such funds are to be disbursed and shall promptly notify the City if the Society determines any expenditures submitted for reimbursement are determined not to qualify for reimbursement from donations funds.
5. NOTICES
Notices required under this Agreement shall be delivered to the City and the Society at the address listed below:
For the CITY: For the Society:
City of Pacific Grove Heritage Society of Pacific Grove 300 Forest Ave P.O. Box 1007
Pacific Grove, CA 93950 Pacific Grove, CA 93950
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Attn: Daniel Gho Attn: Mark Travaille
6. DISPUTE RESOLUTION. In the event of a dispute arising out of the performance of this Agreement, the Parties shall make good faith efforts to resolve the dispute. Any of the Parties may, as soon as a conflict is identified, submit a written statement of the conflict to the other Party. Within five (5) business days of receipt of such a statement of conflict, the Party shall respond, and a meeting will be arranged within ten (10) business days thereafter to arrive at a negotiated settlement or procedure for settlement. If, within thirty (30) business days from the initial filing of a statement of conflict, a settlement cannot be reached, the Parties agree to submit the matter to the Administrative Services Director to determine the funding dispute.
7. MISCELLANEOUS PROVISIONS.
A. Amendment. This Agreement may be amended or modified only by an instrument in writing signed by the Parties. The Parties agree that the Prior Agreements is amended in part by this Agreement.
B. Waiver. Any waiver of any terms and conditions of this Agreement must be in writing and signed by all of the Parties. A waiver of any of the terms and conditions of this Agreement shall not be construed as a waiver of any other terms or conditions in this Agreement.
C. Headings. The headings are for convenience only and shall not be used to interpret the terms of this Agreement.
D. Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of California. Venue shall be in Monterey County.
E. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.
F. Authority. Any individual executing this Agreement on behalf of the City, the Friends, or the Foundation represents and warrants hereby that he or she has the requisite authority to enter into this Agreement on behalf of such party and bind the party to the terms and conditions of this Agreement.
G. Integration. The First Agreement, Second Agreement, and this Agreement represent the entire Agreement between the Parties with respect to the subject matter of this Agreement and shall supersede all prior negotiations, representations, or agreements, either written or oral, between or among the Parties as of the Effective Date of this Agreement, which is the date that the City signs the Agreement.
H. Severability. If any of the provisions contained in the Agreement are held illegal, invalid, or unenforceable, the enforceability of the remaining provisions shall not be impaired thereby. If a part of this Agreement is valid, all valid parts that are severable from the invalid part remain in effect. If a part of this Agreement is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.
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I. Successors and Assigns. This Agreement shall be binding on, and inure to the benefit of, the Parties’successors and assigns.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written below
Heritage Society of Pacific Grove
Mark Travaille Date
President, The Heritage Society of Pacific Grove
Jean Anton Date
Secretary, The Heritage Society of Pacific Grove
Recipient:
CITY OF PACIFIC GROVE
Nick Smith, Mayor Date
Approved as to Form:
City Attorney Date
City of Pacific Grove
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EXHIBIT A
DESCRIPTION OF CHAUTAUQUA HALL RENOVATION PROJECT
CHAUTAUQUA HALL DESIGN FEES
Discipline Firm Proposed Fee
Architecture Hunter Porter Eldridge Architecture $88,000.00 Landscape Architecture Oona Johnson Landscape Architecture $15,500.00 Kitchen Consultant Patrick Stein $17,933.00
ADA Consultant Eagle Project Management $4,125.00
Mechanical/Plumbing Cole Briet Engineering $20,000.00
Structural Mayone Structural Engineering $25,000.00
A/V Media Systems Group $6,050.00
Total $176,608.00
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Agenda No. 13 B
CITY OF PACIFIC GROVE
300 Forest Avenue, Pacific Grove, California 93950
TO: Honorable Mayor and Members of the City Council
FROM: Fred Marsh, Administrative Services Director
MEETING DATE: January 21, 2026
SUBJECT: Annual Financial Reports and Audit
CEQA: Does not constitute a Project per California Environmental Quality Act Guidelines Section 15378
RECOMMENDATION
Receive the reports noted in this report.
DISCUSSION
The City contracted with The Pun Group, a firm of independent certified public accountants, to audit the City of Pacific Grove’s financial statements for the fiscal year ending June 30, 2025. The audit was performed in conformance with Generally Accepted Auditing Standards (GAAS).
A copy of the following reports for Fiscal Year 2024-25 are attached for the Board’s review:
Annual Comprehensive Financial Report (ACFR)
Popular Annual Financial Report (PAFR)
Report on Agreed-Upon Procedures Applied to the Appropriations Limit Schedule (GANN Limit)
Transportation Safety and Investment Plan Account Fund (TAMC Measure X) Report Auditor’s Required Communication (AU-C 260)
The PAFR provides an executive summary of the ACFR, including financial statements for the General Fund and the City’s other major and enterprise funds. The City’s General Fund met the Board adopted policy for reserves for Fiscal Year 2024-25 of 25% of its annual expenditures. The Independent Auditor's Report, indicates that the financial statements in the ACFR present fairly, in all material respects, the financial position of the City. This “unmodified” opinion is the optimal opinion to receive from an external auditor.
The single audit report will be completed at a later date prior to the submission deadline of March 31, 2026 for fiscal year 2024-25 as the City did receive over $750,000 in federal grants for FY 24-25. There were no recommendations for improvements in internal controls noted by the auditors or exceptions noted in the City’s calculation of the GANN limit. Both the ACFR and PAFR have been submitted to the Government Finance Officers Association (GFOA) for consideration as part of their awards programs, for which the Agency has won awards in prior years for its ACFR and PAFR.
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OPTIONS
Take alternative action.
FINANCIAL IMPACT:
There is no financial impact associated with receiving this report.
FOCUSED PRIORITY AREA: Not Applicable.
Attachments
Annual Financial Reports Presentation
2025 PAFR
2025_Pacific Grove City of_AU-C 260_Conclusion
2025_Pacific Grove, City of_ACFR_FINAL
2025_Pacific Grove, City of_Measure X_FINAL
2026_Pacific Grove_GANN Report_FINAL
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City Council
City of Pacific Grove
Annual Financial
Reports and
Audit
Fiscal Year 2024-25
January 21, 2026 Annual Financial Reports and Audit 1
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Background –
Annual Financial Reports and Audit
City contracted with The Pun Group, a firm of independent CPAs to audit the City’s financial statements for FY 2024-25
The audit was performed in conformance with Generally Accepted Auditing Standards (GAAS).
The City received an “unmodified” opinion on its financials, the optimal opinion to receive from an external auditor.
There were no recommendations for improvements in internal controls reported by the auditor.
January 21, 2026 Annual Financial Reports and Audit 2
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Reports Included
Annual Comprehensive Financial Report (ACFR)
Popular Annual Financial Report (PAFR)
Report on Agreed-Upon Procedures Applied to the Appropriations Limit Schedule (GANN Limit) for FY 25-26
Transportation Safety and Investment Plan Account Fund (TAMC Measure X) Report
Auditor’s Required Communication (AU-C 260)
January 21, 2026 Annual Financial Reports and Audit 3
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The PAFR provides a summary of the ACFR, including financial statements for the General Fund and other major and enterprise funds The City’s General Fund met the Board adopted policy for reserves for Fiscal Year 2024-25 of 25% of its annual expenditures
The single audit report will be completed at a later date prior to the submission deadline of March 31, 2026 for fiscal year 2024-25 as the City did receive over $750,000 in federal grants for FY 24-25. Both the ACFR and PAFR have been submitted to the Government Finance Officers Association (GFOA) for consideration as part of their awards programs
January 21, 2026 Annual Financial Reports and Audit 4
Additional Highlights
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Recommendation
Receive the Reports Noted in This Report
January 21, 2026 Annual Financial Reports and Audit 5
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City of Pacific Grove
California
Popular Annual Financial Report
For the Fiscal Year Ended June 30, 2025
Website: www.cityofpacificgrove.gov
Facebook: CityofPacificGrove
X/Twitter: @PacificGrove
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Matthew Mogensen
City Manager
Table of Contents
City Profile and Demographics ............................. 3 Government Structure and Services ...................... 4 Departmental Achievements ................................. 5 Management Discussion and Analysis .................. 6 Financial Highlights ............................................... 7 Capital Assets ...................................................... 15 Debt, OPEB and Pension Obligations .................. 16 Economic Factors / Next Year’s Budget ............... 17 Mission and Vision
Mission: To deliver quality professional public
services in the City and region
Vision: To thoughtfully grow as an inclusive
community, protecting its character
Core Values
Leadership: Uphold the highest work ethic
Inclusiveness: Cultivate an environment of trust
Integrity: Safeguard public trust
Collaboration: Promote transparent engagement
Stewardship: Protect our natural environment
Focused Priority Areas and Goals
Recreation: Robust and accessible activities
Infrastructure: Maintain community assets
Stewardship: Implement sustainable practices
Housing: Diversity affordable opportunities
Overview of Goals
City Council has developed goals (focus areas) which
have been incorporated into the two year budget and
capital improvement plan. Staff creates a related
work plan to measure progress on these goals.
Periodic progress reports are presented to Council to
provide status updates on these goals.
The City of Pacific Grove
presents its Popular Annual
Financial Report (PAFR) for the
Fiscal Year ended June 30th.
The PAFR is designed to
present the City’s financial
condition in a concise, easy to
read format for all users.
Summary of Annual Report
This report summarizes the
Annual Comprehensive Financial
Report (ACFR), containing more
detailed financial information.
Certain disclosures required by
generally accepted accounting
principles (GAAP) are omitted.
Audit Opinion / Awards for Excellence
The City has received a “clean” unmodified audit
opinion for its ACFR, and a Certificate of
Achievement for Excellence in Financial
Reporting (COA) from the Government Finance
Officers Association (GFOA). In addition, the City
has received awards for excellence for its
operating budget from GFOA and the California
Society of Municipal Finance Officers and from
GFOA for its PAFR. These awards focus on
providing informative documents for the public.
Social Media for the City
Website: cityofpacificgrove.org
Facebook: CityofPacificGrove
X/Twitter: @PacificGrove
Welcome Message
From the
City Manager
City of
Pacific Grove PAFR
Fiscal Year 2024-25
Pacific Grove FY 24-25 PAFR 2
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City Profile / Demographics
The City is a small coastal community located in Monterey County that occupies just under three square miles, with a population of approximately 15,000 residents, ranked number 327 in size in California, ↓ 0.4% for the current year and ↓ 0.2% since 2020. Of the adults, 97% have high school degrees and 59% have college degrees, with an average household income of over $100K and median sales price of over $1 million, with 49% of the residential properties owner occupied.
Climate / Location
The City is situated on a peninsula which is bordered by Monterey, Pebble Beach, the Pacific Ocean, and Monterey Bay with a County unemployment rate of approximately 7%. Pacific Grove has a very temperate climate year round, with high temperatures ranging from the 70s in the late summer to the 50s in the winter. Pacific Grove has over 1,300 registered historical homes built prior to 1926.
Education
The Pacific Grove Unified School District (PGUSD) serves the City and portions of Pebble Beach. Based on the California Department of Education's Academic Performance Index scores, PGUSD has received the highest overall ranking of all public schools on the Monterey Peninsula. Schools within the district include Pacific Grove High School, Pacific Grove Middle School, Robert Down Elementary School, and Forest Grove Elementary School. Residents can take advantage of nearby colleges, including Monterey Peninsula College, the Middlebury Institute of International Studies at Monterey, California State University Monterey Bay, and the Hopkins Marine Institute.
Businesses / Additional Demographics
The City has a wide variety of businesses ranging from professional services to health care; and retail sales to lodging accommodations. Tourism is a key economic driver for the City, with a large number classified as either in the accommodation, food service or retail industries. Top employers within the City include the City and school district, Asilomar Hotel and Conference Center, three retirement communities and the local supermarkets. Hospitals in the vicinity include the Community Hospital of the Monterey Peninsula (CHOMP), Natividad Medical Center and Salinas Valley Memorial Hospital, while airports in the vicinity include Monterey Regional Airport, Marina Municipal Airport and San Jose International Airport. Additional demographics are below using the Quickfacts section of Census.gov:
Category Amount Category Amount
Persons 65 and older 29% Married 55%
Persons 0-18 / 19-64 16% / 55% Poverty Level 7.1%
High School Graduates 97% College Graduates 59%
Median Monthly Rent $2,384 Mean Travel Time to Work 21 minutes Persons per household 2.09 % in Workforce 56%
Community Attractions and Events
The City is home to many attractions, including Point Pinos Lighthouse, Hopkins Marine Station, Asilomar State Beach, Lovers Point Park and Beach, Butterfly House, the Monterey Bay Coastal Recreation Trail and Shoreline Park. The city also offers many special events during the year, including:
Good Old Days • Christmas at the Inns
Butterfly Parade • Farmers’ Market
Butterfly Ball • Holiday Parade of Lights
City 4th of July Celebration • Little Car Show
Monterey Bay Half Marathon • Holiday Tree Lighting
Fourth of July and Butterfly Parades
Asilomar State Beach
Pacific Grove Elementary School
Pacific Grove FY 24-25 PAFR 3
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City Government Structure and Services
Pacific Grove is a Charter City which was incorporated
in 1889. The City operates under the Council-City
Manager form of government with a seven-member
City Council elected by the citizens. The Mayor is
elected to serve a two-year term and Council
members are elected to four-year terms. The Council
has the authority to establish all laws and regulations, subject only to the limits of the City Municipal Code
and State legislation. The City Council appoints a City Manager to serve as the chief administrative officer.
The City provides police protection, street, park and facility maintenance, recreational, planning, zoning, economic development, library, administrative and financial services for Pacific Grove. Fire protection services are provided through a contract with the City of Monterey. Additional services include sewer operations, a municipal golf course, Point Pinos Lighthouse, cemetery, a monarch butterfly sanctuary and habitat preserve, several local parks, trails and open space and a local water reclamation facility. The City has approximately 100 full-time employees.
History
Native Americans, which are currently known as the Ohlone/Costanoan-Esselen Nation originally occupied the coastal and inland areas, which included Pacific Grove. In 1852, development began when Congress commissioned the building of eight lighthouses on the West Coast. Pacific Grove’s Point Pinos location was selected as one of the first seven sites in California to receive a lighthouse. The Point Pinos Lighthouse was completed in 1854.
David Jacks owned most of the land that now constitutes Pacific Grove. In 1875, he consented to the development of a Methodist Christian Seaside Retreat on 100 acres of pine-covered coastal land. Other in habitants included Chinese immigrants who established a thriving fishing village. As time went on, Pacific Grove began enticing more visitors. The first hotel opened in 1887, followed by the incorporation of the City and the addition of a railroad in 1889. Within ten years, the Pine Street School, the Hopkins Seaside Lab, and the Pacific Grove Bath House were built, and in 1908 through a $10,000 Carnegie grant and a land donation, the City opened a public library.
Key Performance StaƟsƟcs
Police Calls for Service 13,316 ↑ 1%
Fire Calls for Service 2,042 ↑ 5%
Public Works Work Orders 1,327 ↓ 26%
Building Permits 1,234 ↑17%
Library Materials Circulated 238,000 ↓16%
Street/Sewer Miles Maintained 55 / 58 ↔
Parks Maintained 19 ↔
Lover’s Point
Downtown
Pacific Grove FY 24-25 PAFR 4
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Selected Departmental Achievements – Current Fiscal Year The City strived to make progress on a number of significant goals previously established including the following, which address all of the City’s areas of focus. A significant portion of these goals are funded by the General Fund, with applicable portions being funded by grants and the City’s enterprise, capital and special revenue funds.
City Manager
Implemented an electronic performance management system Ongoing importing of contracts into Laserfiche (past & present) Continued implementation of the retention and recruitment plan Administrative Services – Information Services
Completed Cybersecurity Assessment project
Enhanced internet reliability and performance at the City Hall, PD, and Library Completed network and server upgrades, implement maps application Administrative Services - Finance
Received an award for excellence for the City’s Financials (ACFR) from GFOA Received awards for the City’s operating budget from GFOA and CSMFO Enhanced the transparency of the department's section of the City's website Community Development
Submitted second draft to the California Department of Housing (HCD) Offered next day inspection services, with a focus on the new downtown hotel Sought qualifying housing rehabilitation projects for use of CDBG funds Fire
Completed significant fire station upgrades including roof and tower repair Began Advanced Life Support (ALS) paramedic service
Began a Defensible Space program to inspect high fire severity zones Library
Successful efforts helped to support intergenerational events and programming Opened dialogue with local libraries about establishing partnerships Investigated the feasibility of developing a small/private meeting space for users Police
Maximized social media presence and expanded community outreach efforts Facilitated educational workshops on the dangers of opioids/fentanyl Hosted workshops on traffic safety, leverage technology, increase enforcement Public Works
Maintained over 600,000 SF of roadway, enhanced pedestrian safety Finalized sidewalk dining guidelines, completed sidewalk extension project Completed five Facility Conditions Assessments
Recreation
Added new Summer Sports - Junior Golf Camp and Basketball Camp Ensured continued availability of youth center throughout the school year Expanded existing Youth Soccer League adding an additional 70 registrations Police
Downtown Pacific Grove
Fire Contract with Monterey
Lovers Point
Esplanade Park
Elmarie Dyke Open Space
Pacific Grove FY 24-25 PAFR 5
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Management Discussion and Analysis (Unaudited)
This discussion and analysis (MD&A) includes an overview of the City of Pacific Grove’s (City’s) financial activities and performance for the fiscal year ended June 30, 2025. This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which consists of three parts: (1) Government-Wide Financial Statements, (2) Fund Financial Statements, and (3) Notes to the Basic Financial Statements.
This report also contains other supplementary information in addition to the basic financial statements themselves. The financial statements presented herein include all of the activities of the City and its component units. Please read the MD&A in conjunction with the transmittal letter, the basic financial statements, and the accompanying notes to those financial statements in the Annual Comprehensive Annual Report (ACFR).
Government-Wide Financial Statements
These provide readers with a broad view of the City’s finances, using the economic resources measurement focus and accrual basis of accounting. These accounting methods are similar to those used by private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid. Additionally, certain interfund receivables, payables, and interfund activity have been eliminated. An overview of the City’s functions associated with each classification is listed below. Governmental Activities – All of the City's basic services are considered to be governmental activities. This includes general government, public safety, public works, recreation, library, museum, and community development. These services are supported by general City revenues such as taxes, and by specific program revenues such as development and recreation program fees.
Business-Type Activities – The City’s enterprise activities include cemetery, sewer, water reclamation and golf operations. Unlike governmental activities, these services are fully supported by charges paid by users based on the amount of services they use.
The Statement of Net Position presents financial information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or declining. The Statement of Activities shows how the net position changed during the recent fiscal year.
Fund Financial Statements
These provide readers with additional information about the City’s major funds, how services were financed in the short term, and fund balances available for financing future projects. Most of the City’s funds, excluding the City’s General Fund and Internal Service Funds, have significant restrictions, commitments, or other limitations, which affect the availability of their fund resources for future use.
Notes to the Financial Statements / Supplementary Information These provide additional information to give the reader a better understanding of the data provided in the Government-Wide Financial Statements and Fund Financial Statements. In addition to the basic financial statements and accompanying notes, this report also presents certain Required Supplementary Information concerning the City’s progress in funding its obligation to provide pension and retiree health benefits to its employees. The combining statements for non-major and internal service funds are presented immediately following the required supplementary information.
Pacific Grove FY 24-25 PAFR 6
PGCC 1-21-26
Financial Highlights
Statements of Net Position and of Activities
Net Position – Representing the difference between assets plus deferred outflows of resources less liabilities plus deferred inflows of resources is ↑ $1.5 million to $56.8 million, due to higher revenues from taxes and sewer fees. Note that there was a prior period adjustment to the beginning Net Position of $1.2 million as discussed in Note 16.
Working Capital – Representing current assets less current liabilities was ↑ $ 4.9 million to $35.8 million, due to increased revenues from taxes and sewer fees.
Net Investment in Capital Assets – The City’s largest portion of net position reflects investments in net capital assets less any related debt that was used to acquire those assets. The ending balance was $66.5 million, reflecting the completion of capital projects during the fiscal year.
Unrestricted Net Position – The City had a deficit in unrestricted net position of $20.1 million at the end of the fiscal year. Many different items comprise the unrestricted net position, including the City’s net pension liability offset.
Change in Net Position - Was $2.6 million during the year, comprised of a net change from governmental activities of $0.7 million and from business type activities of $1.9 million.
Operating Revenues / Expenses – Operating revenues consisted of $10.9 million for Charges for Services, $1.6 million for Operating Grants and Contributions, $451K for Capital Grants and Contributions, $30.4 million for taxes and $3.9 million for general revenues. Operating expenses consisted of $38.4 million for governmental activities and $6.2 million for business type activities. 16%
40%
27%
9%
8%
Expenses - $45 Million - FY 24-25
Admin/Other Public safety
Public works Recreational
Development
22%
16%
16%
10%
23%
13%
Revenues - $47 Million - FY 24-25
Property taxes Sales/use taxes
Hotel taxes Other taxes
Service Charges Grants / Other
Pacific Grove FY 24-25 PAFR 7
PGCC 1-21-26
2025 2024 2025 2024 2025 2024 2023
Assets
Current assets $ 31,319 32,815 $ 13,211$ 12,591 $ 46,026 $ 43,910 $ $ 38,549 Capital assets 43,403 44,774 28,447 28,484 71,887 73,221 $ 71,235 Other assets 8,806 1,000 1,328 7,254 8,254 10,134 11,323 Total Assets $ 83,528 84,843 $ 42,658$ 42,403 $ 127,501 $ 125,931 $ 121,107 $ Deferred Outflows Resources 15,323 $ 20,365 $ $ 356 335 $ 15,658 $ 20,721 $ $ 21,318 Liabilities
Current liabilities $ 12,197 9,335 $ $ 1,956 928 $ 10,263 $ 14,153 $ $ 13,244 Noncurrent/other liabilities 62,702 63,260 7,302 7,113 69,815 70,562 71,014 Total Liabilities $ 75,457 72,037 $ $ 9,258 8,041 $ 80,078 $ 84,715 $ $ 84,258 Deferred Inflows Resources 4,888 $ 5,943 $ 1,408$ 1,825 $ $ 7,768 6,296 $ $ 9,109 Net Position
Net investment capital assets 44,104 $ 42,671 $ 22,386$ 21,252 $ 66,490 $ 63,923 $ $ 63,954 Restricted 10,396 9,526 10,396 9,526 10,354
Unrestricted (deficit) (29,703) 11,158 (31,260) 10,425 (20,102) (19,278) (25,251) Total Net Position $ 22,494 23,240 $ 33,544$ 31,677 $ 56,784 $ $ 54,171 $ 49,057 Financial Highlights (Continued)
Summary of Net Position (In Thousands)
Governmental Business-Type Totals
The increase in assets and net position in the Statement of Net Position is due to increased tax receipts and sewer revenues, as well as other revenue and expense variances noted elsewhere in this document. The deficit of Net Position is net of pension related liabilities, inflows and outflows. The restricted net position can only be used for specific activities. The net investment for capital assets is non liquid and not available for spending.
Current and Other Assets
Includes unrestricted cash and investments, receivables, inventory and prepaid items expected to be converted into cash within one year.
Capital Assets
Includes land, buildings, improvements, infrastructure, and right-to-use assets. These items are not available for future spending.
Deferred Outflows / Inflows Resources
A consumption / acquisition of net assets by the government that is applicable to a future reporting period.
Current and Other Liabilities
Represents liabilities expected to be paid with cash within one year.
Long Term Liabilities
Includes the outstanding obligations for the City, including pensions, OPEB and bonded debt.
Net Position
Net investment in capital assets is capital assets net of depreciation and related debt. The restricted portion is subject to externally imposed restrictions for activities such as capital projects, debt service, and community development and is not available for general operations. $25
$30
$36
2023 2024 2025
Total Working Capital
(Millions)
Pacific Grove FY 24-25 PAFR 8
PGCC 1-21-26
Functions/Programs 2025 2024 2025 2024 2025 2024 2023
Program Revenues
Charges for services $ 3,821$ 6,937 3,930 $ 6,314 $ 10,867 $ 10,135 $ 9,499 $ Operating grants/contributions 1,627 858 1,627 2,690 858 Capital grants/contributions 474 452 452 474 1,109
Total Program Revenues 5,153 6,009 6,937 6,314 12,946 11,467 13,298 General Revenues
Taxes 28,931 30,369 30,369 28,931 27,481
Investment earnings 1,444 1,102 511 460 1,562 1,955 497 Other revenues 1,151 2,320 1,151 2,320 1,991
Total General Revenues 31,526 33,791 511 460 34,251 32,037 29,969 Total Revenues 36,679 7,397 39,800 6,825 47,197 43,504 43,267 Expenses
Government Activities * 34,203 38,418 38,418 34,203 17,361 Business-Type Activities * 4,188 6,165 6,165 4,188 3,934 Total Expenses 38,418 34,203 6,165 4,188 44,584 38,391 21,295 Excess/(Deficiency) before Transfers 1,382 2,476 1,232 2,637 2,613 5,113 21,972 Transfers (635) (188) 635 188 - - -
Increase/(Decrease) in Net Position 747 2,288 1,867 2,825 2,613 5,113 21,972 Net Position, Beginning Year (restated) 22,494 20,206 31,677 28,851 54,171 49,057 27,251 Net Position, End of Year $ 22,494 23,241 $ 33,544$ 31,676 $ 56,784 $ 54,170 $ 49,223 $ * See following page for detailed breakouts of these expenses Governmental Business-Type Totals
Summary of Statement of Changes in Net Position (In Thousands) Financial Highlights (Continued)
The Statement of Changes in Net Position reflects the fact that the City’s net position increased by approximately $2.6 million in the current fiscal year.
The increase in net position is due to increases in tax and sewer fee revenues received due to increases in the
assessed value of property in the City and an increase in sewer rates assessed for the fiscal year.
$18.0
$22.6
$27.5
$28.9
$30.4
2016
2019
2023
2024
2025
General Governmental Tax Revenue by Year (In Millions)
Pacific Grove FY 24-25 PAFR 9
PGCC 1-21-26
2023 2024 2025 % Variance
Program Expenses
General government $ 3,241,604 $ 6,440,878 $ 6,769,288 15% 328,410 $ Public safety 7,895,196 15,217,138 17,847,637 40% 2,630,499 Public works 2,809,143 5,230,431 5,714,615 13% 484,184
Recreation 554,042 1,562,919 2,136,618 5% 573,699
Library / Museum 964,612 1,608,628 1,965,667 4% 357,039 Community Development 1,426,245 3,666,942 3,574,254 8% (92,688) Interest and fiscal charges LT debt 470,144 476,107 1% (65,731) 410,376 Total governmental activities expenses 17,360,986 34,203,043 38,418,455 86% 4,215,412 Cemetery 469,815 452,270 2% 364,305 816,575
Sewer 1,045,865 1,224,324 1,483,581 3% 259,257
Local Water Project 2,136,404 2,042,255 3,059,850 7% 1,017,595 Golf 282,177 468,767 2% 336,627 805,394
Total business-type activities expenses 3,934,261 4,187,616 6,165,400 14% 1,977,784 Total primary government expenses $ 21,295,247 $ 38,390,659 $ 44,583,855 100% 6,193,196 $ Program Revenues
Charges for services:
General government $ 1,439,808 $ 1,210,812 $ 1,268,917 10% 58,105 $ Public safety / Public Works 614,858 601,498 5% 30,044 631,542 Recreation / Library / Museum 452,660 601,947 6% 116,194 718,141 Community Development 1,134,102 1,406,529 1,311,599 10% (94,930) Operating grants and contributions 2,689,705 858,172 1,626,687 13% 768,515 Capital grants and contributions 1,109,485 474,137 451,865 3% (22,272) Governmental activities program revenues 9,958,525 5,153,095 6,008,751 46% 855,656 Cemetery 773,195 716,931 5% (102,034) 614,897
Local Water Project 597,011 1,026,820 1,328,142 10% 301,322 Sewer 3,693,156 3,825,616 4,115,081 32% 289,465
Golf 791,881 745,216 7% 133,924 879,140
Business-type activities program revenues 5,855,243 6,314,583 6,937,260 54% 622,677 Primary government program revenues 13,297,993 12,416,782 12,946,011 100% Governmental activities (9,918,236) (29,049,948) (32,409,704) Business-type activities 1,920,982 2,126,967 771,860
Primary government net (expense)/revenue (7,997,254) $ $ (31,637,844) (26,922,981) $ Fiscal Year Ended June 30
Financial Highlights (Continued)
Statement of Changes in Net Position (Continued)
Revenues include charges for services such as sewer charges, grants, and governmental funding to finance the costs of special programs, and taxes, including property, sales, franchise, transient occupancy, and business license taxes. The City share of the 1% levy per Prop. 13 is 16%. Expenses include Administration, Police, Fire, Public Works, Community Development, Recreation, the City's golf course, Sewer collection system, Cemetery and the City's local water project. Expenses for FY 2023 were affected by significant pension actuarial adjustments.
Pacific Grove FY 24-25 PAFR 10 PGCC 1-21-26
2023 2024 2025 % Variance
General Revenues / Other Changes in Net Assets
Governmental activities:
Taxes
Property taxes $ 9,330,981 $ 10,516,128 10,001,561 $ 32% 514,567 $ Sales and use taxes 6,734,940 7,146,935 7,589,358 23% 442,423 Franchise taxes 1,620,136 1,682,562 1,589,922 5% (92,640) Transient occupancy (Hotel) taxes 7,105,256 7,375,869 7,556,230 23% 180,361 Utility users taxes 2,097,934 2,118,068 2,435,825 7% 317,757 Business license tax 425,691 427,918 2% 73,940 501,858
Property transfer tax 150,278 159,401 0.5% (2,703) 156,698 Property taxes in lieu of motor vehicle fee 15,335 18,480 0.1% 5,136 23,616 Unrestricted Investment earnings 179,637 1,443,592 1,102,043 3% (341,549) Miscellaneous or Other revenues 1,143,687 1,150,805 2,319,504 7% 1,168,699 Transfers (162,500) (187,500) (635,188) -2% (447,688)
Total governmental activities 28,641,375 31,337,691 33,155,994 100% 1,818,303 Business-type activities:
Unrestricted Investment earnings 151,223 511,470 459,953 Miscellaneous or Other revenues
Transfers 162,500 187,500 635,188
Total business-type activities 313,723 698,970 1,095,141 Total primary government $ 28,955,098 $ 34,251,135 32,036,661 $ Statement of Changes in Net Position (Continued)
Fiscal Year Ended June 30
Financial Highlights (Continued)
Governmental Activities
The total cost of services for all governmental activities in FY 24-25 was $38.4 million, with program revenues of $6.0 million resulting in a net cost of $32.4 million. The remaining portion was covered by taxes and other revenues, such as interest and other miscellaneous revenue. The cost of services went up driven by cost escalations and the impact of labor agreements and the most recent pension actuarial. $9.3
$10.0 $10.5
2023 2024 2025
Property Taxes - In Millions
Business Activities
The total cost of all Business-Type activities this year was $6.2 million. As shown in the Statement of Activities, these were funded by charges for services totaling $6.9 million amounts paid by users of the systems, along with interest earned on invested cash balances. Net position increased by $1.9 million for business-type activities (including investment earnings and transfers) to $33.5 million.
$7.1 $7.4 $7.6
2023 2024 2025
Hotel Taxes - In Millions
Pacific Grove FY 24-25 PAFR 11 PGCC 1-21-26
CDBG Capital Other
General RSTP Grant Projects Govt.
Fund Fund Fund Fund Funds Total
Total Revenues $ 35.3 0.5$ 0.02$ $ 40.2 4.4 $
Total Expenditures 31.3 0.0 1.0 4.2 0.1 36.6
Revenues Over (Under) Expenditures 0.4 4.0 - (1.0) 0.2 3.6 Transfers in 0.1 3.0 0.3 3.4
Transfers out (4.0) (0.1) (4.1)
Proceeds from sale of assets -
Inception of subscription liabilities 0.4 0.4
Net change in fund balances (deficit) 0.4 0.1 - 2.0 0.8 3.3 Beginning Fund Balance (deficit) - restated (0.4) 17.4 1.3 0.3 8.2 26.8 End of year Fund Balance (deficit) $ 17.5 $ 1.3$ 2.3$ 9.0 - $ 30.1 $ Financial Analysis of the City's Governmental Funds
Summary of Changes in Fund Balance - Governmental Funds (In Millions) Fund Name / Type
The Fund Financial Statements focus on individual parts of the City’s government, reporting operations in more detail than the Government-Wide Statements. These funds report on near-term inflows, outflows and balances of spendable resources. The City’s governmental funds reported a combined fund balance at June 30, 2025 of $30.1 million, an increase of $3.3 million over the end of the previous fiscal year. Major changes are noted below.
The General Fund is the chief operating fund of the City and reflects an increase of $0.1 million in fund balance.
Capital Projects fund balances increased $2.0 million due to the carryover of capital projects to Fiscal Year 25-26. $9.9 $11.6 $11.9 $11.5 $9.8 $10.0 $12.2 $15.0 $17.6 $17.5 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Available General Fund Reserves (In Millions)
$5.9 $6.4 $6.8 $9.2 $8.4 $7.6 $7.7 $10.0 $10.4 $12.6
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Designated Reserves Other Govt Funds (In Millions)
Pacific Grove FY 24-25 PAFR 12 PGCC 1-21-26
Budgetary Highlights - General Fund
Original Final
Functions/Programs Budget Budget Actual Variance
Revenues
Property taxes $ 10,296,000 $ 10,296,000 $ 10,516,128 $ 220,128 Sales and use taxes 6,194,000 6,194,000 6,360,487 166,487 Franchise and other taxes 1,659,000 1,659,000 1,547,278 (111,722) Transient occupancy taxes 7,012,000 7,012,000 6,960,718 (51,282) Utility user taxes 2,043,000 2,043,000 2,435,825 392,825 Business license / Other taxes 543,000 543,000 665,849 122,849 Total Taxes 27,747,000 27,747,000 28,486,285 739,285
Licenses, permits and impact fees 1,325,000 1,325,000 1,154,121 (170,879) Intergovernmental / Fines and Forfeitures 535,250 535,250 467,227 (68,023) Charges for services 1,882,590 1,882,590 1,940,548 57,958 Interest, rents and concessions 558,200 558,200 874,568 316,368 Other revenues 1,260,687 1,260,687 2,339,408 1,078,721
Total Revenues 33,308,727 33,308,727 35,262,157 1,953,430 Expenses
General government 5,684,861 5,902,161 5,253,961 648,200 Public Safety - Police 8,931,103 9,069,754 8,328,813 740,941 Public Safety - Fire 4,915,600 4,920,982 5,022,031 (101,049) Public works 5,144,860 5,712,860 4,619,697 1,093,163
Recreation 1,623,839 1,683,839 1,697,656 (13,817)
Library / Museum 1,596,317 1,626,694 1,605,538 21,156
Community development 2,983,158 3,391,158 2,995,511 395,647 Capital Outlay 505,100 305,342 173,561 131,781
Debt Service (Principal / Interest) 1,462,562 1,462,562 1,546,488 (83,926) Total Expenses 32,847,400 34,075,352 31,243,256 2,832,096 Other Financing Uses (Net) (1,551,187) (3,718,220) (3,899,615) 181,395 Increase / (Decrease) in Net Position $ (1,089,860) $ (4,484,845) 119,286 $ 4,604,131 Net Position, Beginning of Year 17,364,795
Net Position, End of Year ` $ 17,484,081
General Fund Budget Actual (In Thousands)
During the fiscal year, the City Council revised the City’s budget with adjustments for various revenue and expenditure changes. After taking into account these adjustments, General Fund revenues were higher than the final budget by $2.0 million, which is attributable to higher tax collections and the receipt of one-time funds for various projects, and General Fund expenditures were under budget by $2.9 million, due to personnel cost savings resulting from vacancies in several of the City’s departments. Significant variances are shown below. The City is projecting to meet its 25% reserve target for Fiscal Years 2025-26 and 2026-27.
Pacific Grove FY 24-25 PAFR 13 PGCC 1-21-26
Governmental
Activities
Local
Water Golf Internal
Cemetery Project Sewer Course Service
Fund Fund Fund Fund Total Funds
Total Operating Revenues $ 0.6 1.3$ 4.1$ 0.9$ 6.9$ $ 2.7 Total Operating Expenses 0.8 1.4 3.0 0.7 5.9 3.3
Revenues Over (Under) Expenses (0.2) (0.1) 1.1 0.2 1.0 (0.6) Transfers in 0.6 0.6
Investment Earnings 0.3 0.1 0.4
Interest Expense (0.1) (0.1)
Net change in Net Position (0.2) 0.5 1.4 0.2 1.9 (0.6)
Beginning of year Net Position 1.3 25.3 1.1 31.7 4.0 0.8 End of year Net Position 1.1 26.7 1.6 33.6 4.2 0.2
Ending Working Capital $ 1.0 $ 10.1$ - 1.0$ 12.1$ $ 1.3 Budgetary Highlights - Proprietary Funds
Summary of Changes in Net Position - Proprietary Funds (In Millions) Business Type Activities
These funds provide the same type of information found in the Government-Wide Financial Statements but in more detail. Factors concerning these funds have previously been addressed in the discussion of business-type activities under the Government-Wide Statements. $3.2
$3.5
$3.8
$3.8
$4.5
2016
2019
2023
2024
2025
Wastewater Revenues - In Millions
$1.4
$1.7
$1.6
$1.5
$2.5
2016
2019
2023
2024
2025
Wastewater Expenses - In Millions (Excludes Depreciation) Pacific Grove FY 24-25 PAFR 14 PGCC 1-21-26
2025 2024 2025 2024 2025 2024 2023
Land $ 2,338 2,338 $ $ 363 363 $ 2,701 $ 2,701$ $ 2,701 Construction in progress 5,525 1,665 1,107 2,772 983 6,508 6,040 Buildings and improvement 8,449 9,250 4,485 4,608 13,735 13,057 13,655 Infrastructure 25,910 22,142 22,136 52,304 48,046 30,162 47,150 Machinery and equipment 883 350 394 845 1,195 1,277 1,259 Subscriptions (SBITAs) 298 514 514 - 298 430
Total Capital Assets, Net $ 43,403 44,774 $ 28,447 $ 28,484 $ 73,221 $ 71,887 $ 71,235 $ Capital Outlay Capital Projects
• IT Network Upgrade • Pedestrian Safety - Central • VMWARE Upgrade and Server Refresh • Pump Station 15.5 • Street Crack and Slurry Seal
• Redundant Internet and Firewall • Street Rehabilitation • Golf Cart Path Improvements
• Police Equipment • Golf Tee Expansion / Renovation • Fire Equipment • Recreation Trail Improvements Summary of Capital Assets at Year End (In Thousands)
Totals
Capital Assets
• Patrol Vehicle Purchase
• Phone System Upgrades
Governmental Business-type
The City of Pacific Grove’s investment in capital assets as of June 30, 2025 amounts to $73.2 million (net of accumulated depreciation and amortization). This includes net capital assets from governmental activities of $44.8 million and net capital assets from business type activities at $28.5 million. This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, park facilities, roads, and sewer systems. The table below summarizes the City’s capital assets net of depreciation for the last three fiscal years:
Major capital projects and capital outlay during the fiscal year included the following:
Additional information on capital asset activity is described in Note 7 to the financial statements. $1.9 $1.8
$2.1 $2.2 $2.1
2023 2024 2025 2026 2027
Capital Outlay - Streets (Millions)
Actuals through FY 2025,
Budgeted Thereafter
$0.5 $0.7 $1.0 $0.1
$7.0
2023 2024 2025 2026 2027
Capital Outlay - Sewer (Millions)
Actuals through FY 2025,
Budgeted Thereafter
Pacific Grove FY 24-25 PAFR 15 PGCC 1-21-26
FY 25-26 * 2025 2024 2023 Maturity Interest
Pension Obligation Bonds 1,500 5,409 6,458 $ 7,404 2029 5.67-6.12% PG&E Loan 13 19 31 51 2027 Varies
SBITA Liability 102 402 201 318 2032 Varies
Total Debt - Governmental Activities 1,615 $ 5,830$ 6,690 $ 7,773 $ 2013 Wastewater Revenue Refunding Bonds 88 503 574 $ 640 2031 3.35% Golf Course COP Refunding 1,318 272 1,526 1,725 2030 4.35% Clean Water State Revolving Fund Loan 4,223 206 4,386 4,547 2048 1.00% Total Debt - Business Type Activities $ 6,044 566 $ 6,486 $ 6,912 $ * Includes interest as part of the debt service for the fiscal year Long-Term Debt, Pension and Other Post Employment Benefit (OPEB) Obligations Summary of Outstanding Bonded/Lease Long-Term Debt at Fiscal Year End (In Thousands) The City’s net pension and net OPEB obligations as of
June 30, 2025 were $54.7 million and $3.2 million
respectively. As of June 30, 2024, the City’s net pension obligation was 78.1% funded. During the year, LongTerm Debt from governmental activities decreased due to debt service payments. Debt for business type activities decreased by 13% due to debt service on the following:
Pension Obligation Bond - In 2006, the City issued
Taxable Pension Obligation Bonds in the amount of $19.4 million as part of the California Statewide Communities Development Authority Program.
Clean Water State Revolving Fund Loan - In 2015, the
City secured State Water Resources Control Board
("SWRCB") funding for $5.3 million to construct a
recycled water treatment plant, sewer diversion
structure, waste pump station, and user connections.
Golf Course / Wastewater Revenue Refunding Bonds -
The City has a $3.1 million Site Lease with Columbia Bank to refund its 2014 Golf Course Certificate of Participation, secured by the transfer of property rights. The City also issued Wastewater Revenue Refunding Bonds for $1.2
million, which refinances the California State Community Development Authority Series 2001B Revenue Bonds.
Standard and Poor’s and Moody’s assigned ratings of SP1+ and MIG 1 to the 2006 Pension Obligation Bonds. The City has not received any updates to this rating. The City does not have any General Obligation Bonds (GO). The
California Government Code, Section 43605 caps GO
debt at 15% of the assessed value of all real and personal property within the City. The legal debt margin for Fiscal Year 2024-25 is $749 million. Additional information is described in Note 8 to the financial statements.
45%
19%
36%
Bonded Debt
Pension
Bonds
Golf /
Other
Clean
Water
Pacific Grove FY 24-25 PAFR 16 PGCC 1-21-26
3.49% 2 Year Treasury
$53 Billion Trade Deficit
↑ 4.3% GDP
4.6% Unemployment
$ Oil Price per Barrel 59
↑ 2.7% Inflation
$ Euro / Dollar 1.16
↑ 3.5% Retail Sales
↑ 1.4% Home Prices
Economic Factors / Next Year's Budget
Key U.S. Economic Statistics
(November 2025)
The City prepares an annual budget based on council-set goals and priorities, which contains a multi-year financial plan that focuses on long-term financial viability and allows decision-makers to understand the impact of their policy decisions. Budget development is guided by a series of policies adopted by the City Council, which guides long-term planning, minimum reserve levels, employee compensation, cash and debt management, information technology, and utility rates. The budget was based on these key assumptions:
Property Taxes
Proposition 13 limits the property tax to 1% of each property’s full value, plus any additional percentages for specific voter approved indebtedness and limits the growth rate to a maximum of 2% for any given year. The County Assessor re-appraises each real property parcel when there are purchases, construction, or other changes in ownership. The City receives approximately sixteen cents of every dollar of property taxes, with the balance distributed to the Pacific Grove Unified School District, County of Monterey, and local special districts.
Sales and Use Taxes
In April 2022, approximately 60% of voters approved Measure A, a new 0.50% transaction and use tax. This increased the combined sales tax rate to 9.25% in October 2022. The General Fund portion of the City sales tax is comprised of a 1% Bradley-Burns statutory sales tax rate; and Measure U, a 1% transaction and use tax that was approved by voters in 2008. The tax rate increased to 1.5% when Measure A became effective.
Utility Users Tax
The City imposes a utility users’ tax to residents and businesses within the City that utilize water, gas, electricity, telephone, and cable services. This tax is assessed at a rate of 5% of the amount charged by the utility; and it is paid by the person consuming the service. The amount of revenues received is dependent on the underlying rate structures and new development projects.
Transient Occupancy (Hotel) Tax (TOT)
TOT Is a lodging tax that is collected on overnight rental accommodation stays of 30 consecutive days or less. In 2010, the City updated its municipal code and began collecting TOT on residential or short-term rental properties (STRS). In Fiscal Year 17/18, the City approved an ordinance to reduce the number of short-term rentals. In Fiscal Year 19/20, there were approximately 200 properties, with an additional 12 home-sharing licenses. In November of 2018,
74.9% of voters approved Measure U, allowing the City to increase the TOT rate from 10% to 12%. This new rate became effective on July 1, 2019. This increased tax has been partially offset by Measure M, which eliminated STRS outside of the Coastal and Commercial zones, effective as of May of 2020. $2.1 $2.1
$2.4
2023 2024 2025
Utility User Taxes
(Millions)
$6.7
$7.1
$7.6
2023 2024 2025
Sales/Use Taxes
(Millions)
Pacific Grove FY 24-25 PAFR 17 PGCC 1-21-26
City of Pacific Grove
Map of Pacific Grove and
Elected Officials
Nick Smith
Mayor
Joe Amelio
Mayor Pro Tempore
Cynthia Garfield
Councilmember
Lori McDonnell
Councilmember
Chaps Poduri
Councilmember
Tina Rau
Councilmember
Paul Walkingstick
Councilmember
Pacific Grove FY 24-25 PAFR 18 PGCC 1-21-26
6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707 December 18, 2025
To the Honorable Mayor and Members of the City Council
of the City of Pacific Grove
Pacific Grove, California
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Pacific Grove (the “City”) for the year ended June 30, 2025, and have issued our report thereon dated December 18, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and Uniform Guidance, as well as certain information related to the scope and timing of our audit. We have communicated such information in our letter to you dated July 1, 2025. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the basic financial statements.
New Accounting Standards
GASB Statement No. 101 – In June 2022, GASB issued Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Implementation of this Statement had a moderate effect on the City’s financial statements for the fiscal year ended June 30, 2025.
GASB Statement No. 102 – In December 2023, GASB issued Statement 102, Certain Risk Disclosures. The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. That objective is achieved by requiring governments to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. The statement also requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2025.
The most sensitive estimates affecting the City’s financial statements were:
Management’s estimate of the fair value of investments is based on information provided by the State of California, U.S. Treasury, and financial institutions. We evaluated the key factors and assumptions used to develop the investment fair market value in determining that it is reasonable in relation to the financial statements taken as a whole.
PGCC 1-21-26
To the Honorable Mayor and Members of the City Council
of the City of Pacific Grove
Pacific Grove, California
Management’s estimate of the depreciation on capital assets is based on the industry standard and past experience on actual useful life of the asset groups. We evaluated the key factors and assumptions used to develop the depreciation on capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the net other postemployment benefits (“OPEB”) liability is based on the actuarial valuation on total OPEB liability. We evaluated the key factors and assumptions used to develop the total OPEB liability in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the net pension liabilities is based on the proportionate share of actuarial valuation on total pension liability and the proportionate share of the fiduciary net position for CalPERS plans. We evaluated the key factors and assumptions used to develop the net pension liability in determining that it is reasonable in relation to the financial statements taken as a whole. Management’s estimate for the “more likely than not” amount of sick leave to be accrued in the compensated absences liability is based on historical “days used” data determined by taking a sample of historic sick leave usage patterns.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:
Note 1 – Summary of Significant Accounting Policies
Note 4 – Leases Receivable and Lease Related Deferred Inflows of Resources Note 10 – Risk Management
Note 11 – Defined Benefit Pension Plan
Note 12 – Other Post-Employment Benefits (OPEB)
Note 13 – Commitments and Contingencies
Note 14 – Stewardship, Compliance and Accountability
Note 16 – Restatement and Prior Period Adjustments of Beginning Net Position The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated December 18, 2025.
PGCC 1-21-26
To the Honorable Mayor and Members of the City Council
of the City of Pacific Grove
Pacific Grove, California
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the Management’s Discussion and Analysis, the Budgetary Comparison Schedules – General Fund and Major Special Revenue Funds, the Schedule of Changes in the Net Pension Liability and Related Ratios, the Schedule of the City’s Proportionate Share of the Net Pension Liability Schedule of Contributions - Pensions, and the Schedule of Changes in Net OPEB Liability and Related Ratios, which are required supplementary information (“RSI”) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the Combining and Individual Nonmajor Fund Financial Statements and Budgetary Comparison Schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the Introductory and Statistical Sections, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Santa Ana, California
PGCC 1-21-26
City of Pacific Grove
California
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2025
Website: www.cityofpacificgrove.gov
Facebook: CityofPacificGrove
X/Twitter: @PacificGrove
PGCC 1-21-26
Cover: Lover's Point: A Coastal Gem of Pacific Grove
Nestled along the rugged coast of California’s Monterey Peninsula lies Lover's Point, a picturesque and historically rich landmark. The name itself is said to date back to the late 19th century, when Pacific Grove served as a Methodist retreat and seaside resort. In its early days, the location was referred to as a "Lover's Lane" of sorts — a place where couples could stroll or meet privately.
Ecological and Geological Significance
Located on the Pacific Ocean, Lover's Point is part of the Monterey Bay National Marine Sanctuary. The intertidal zone around Lover's Point oƯers an excellent opportunity for tide pooling, where visitors can observe marine organisms in their natural habitat. The coastal bluƯs and beach provide both aesthetic value and serve as a natural buƯer against ocean swells, demonstrating a balance between beauty and ecological function.
Recreational Use and Community Engagement
Today, Lover's Point serves as a recreational hub for the Pacific Grove community and its visitors. The calm waters of the cove are particularly inviting, thanks to its sheltered orientation compared to more exposed coastal areas. Each year, Lover’s Point is also a focal point for several community events. Additionally, the point marks the start of the scenic Pacific Grove Coastal Trail, a segment of the larger Monterey Bay Coastal Recreation Trail.
Cultural and Aesthetic Value
Beyond its recreational and ecological roles, Lover's Point has deep cultural resonance. It has been a subject for artists, poets, and photographers who are drawn to its changing light, vivid sunsets, and views of the expansive Pacific.
Preserving the natural beauty of Lover’s Point is an ongoing challenge, particularly in the face of increasing tourism and climate-related pressures. Coastal erosion, rising sea levels, and marine pollution threaten the fragile balance of the ecosystem.
Programs like beach cleanups, habitat restoration projects, and citizen science events invite the community to participate in stewardship. These eƯorts underscore the importance of maintaining Lover’s Point for future generations, both as an ecological haven and a cultural landmark.
PGCC 1-21-26
City of Pacific Grove,
California
Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2025
Prepared by the Administrative Services Department
PGCC 1-21-26
4 PGCC 1-21-26
City of Pacific Grove
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
Table of Contents
Page
INTRODUCTORY SECTION (Unaudited)
Letter of Transmittal ....................................................................................................................................................... 9 GFOA Certificate of Achievement for Excellence in Financial Reporting .................................................................. 16 Organization Chart ....................................................................................................................................................... 17 Officials of the City of Pacific Grove, California ......................................................................................................... 18 Map of the City of Pacific Grove, California ............................................................................................................... 19
FINANCIAL SECTION
Independent Auditor’s Report on the Financial Statements .................................................................................. 21 Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ......................... 25 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ................................................................................................................................ 42 Statement of Activities .................................................................................................................................... 44 Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet ............................................................................................................................................ 51 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position .......................................................................... 52 Statement of Revenues, Expenditures, and Changes in Fund Balances .................................................... 53 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the
Government-Wide Statement of Activities and Changes in Net Position .......................................... 54 Proprietary Fund Financial Statements:
Statement of Net Position ......................................................................................................................... 56 Statement of Revenues, Expenses, and Changes in Net Position ............................................................. 59 Statement of Cash Flows ........................................................................................................................... 60 Index to Notes to the Basic Financial Statements .................................................................................................. 65 Notes to the Basic Financial Statements ................................................................................................................ 67 Required Supplementary Information (Unaudited):
Notes to the Budgetary Comparison Schedule ..................................................................................................... 107 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual:
General Fund ................................................................................................................................................. 109 RSTP Special Revenue Fund ......................................................................................................................... 110 CDBG Grant Special Revenue Fund ............................................................................................................. 111 Schedule of Proportionate Share of Net Pension Liability .................................................................................. 112 Schedule of Contributions – Pensions .................................................................................................................. 114 Schedule of Changes in Net OPEB Liability and Related Ratios:
Retiree Healthcare Plan ................................................................................................................................. 116 5 PGCC 1-21-26
City of Pacific Grove
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued)
Supplementary Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual:
Capital Improvement Projects Fund .............................................................................................................. 121 Nonmajor Governmental Funds:
Combining Balance Sheet ............................................................................................................................. 125 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..................................... 133 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:
Carillion Special Revenue Fund ............................................................................................................. 142 Environmental Enhancement Special Revenue Fund ............................................................................. 143 State Franchise PEG Special Revenue Fund ........................................................................................... 144 Library Building & Equipment Special Revenue Fund .......................................................................... 145 Museum Improvement Special Revenue Fund ....................................................................................... 146 Downtown Business District Special Revenue Fund .............................................................................. 147 Hospitality Improvement District Special Revenue Fund....................................................................... 148 Fire Emergency Equipment Special Revenue Fund ................................................................................ 149 American Rescue Plan Act Special Revenue Fund ................................................................................. 150 Local Streets and Roads Special Revenue Fund ..................................................................................... 151 Gas Tax Special Revenue Fund .............................................................................................................. 152 Chautauqua Hall Special Revenue Fund ................................................................................................. 153 Lighthouse Maintenance & Improvement Special Revenue Fund .......................................................... 154 Senior Housing Special Revenue Fund ................................................................................................... 155 CalHOME Reuse Special Revenue Fund ................................................................................................ 156 General Plan Maintenance Fee Special Revenue Fund ........................................................................... 157 Yount Income Special Revenue Fund ..................................................................................................... 158 Public Safety Augmentation Special Revenue Fund .............................................................................. 159 Supplemental Law Enforcement Special Revenue Fund ........................................................................ 160 Vehicle Abandonment Special Revenue Fund ........................................................................................ 161 Strong Disbursements Special Revenue Fund ........................................................................................ 162 Housing Special Revenue Fund .............................................................................................................. 163 Coastal Conservancy Grant Special Revenue Fund ................................................................................ 164 Operating Grant Special Revenue Fund .................................................................................................. 165 RMRA Special Revenue Fund ................................................................................................................ 166 McIndoo Donation Special Revenue Fund ............................................................................................. 167 ASBS Special Revenue Fund .................................................................................................................. 168 Storm Water Special Revenue Fund ....................................................................................................... 169 Library Endowment Trust Permanent Fund ............................................................................................ 170 Cemetery Endowment Trust Permanent Fund ........................................................................................ 171 Yount Trust Permanent Fund .................................................................................................................. 172 6 PGCC 1-21-26
City of Pacific Grove
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued)
Supplementary Information (Continued):
Internal Service Funds
Combining Statement of Net Position ........................................................................................................... 175 Combining Schedule of Revenues, Expenses, and Changes in Net Position ................................................ 177 Combining Statement of Cash Flows ............................................................................................................ 178 STATISTICAL SECTION (Unaudited)
Financial Trends:
Net Position by Component .................................................................................................................................. 180 Changes in Net Position ........................................................................................................................................ 182 Fund Balances of Governmental Funds ................................................................................................................ 186 Changes in Fund Balances of Governmental Funds .............................................................................................. 188 Revenue Capacity:
General Governmental Tax Revenues by Source .................................................................................................. 190 General Fund Revenues by Sources ...................................................................................................................... 191 Net Assessed Value of Taxable Property .............................................................................................................. 192 Direct and Overlapping Property Tax Rates ......................................................................................................... 193 Principal Property Tax Owners ............................................................................................................................. 194 Property Tax Levies and Collections .................................................................................................................... 195 Debt Capacity:
Ratios of Outstanding Debt by Type ..................................................................................................................... 196 Ratios of General Bonded Debt Outstanding ........................................................................................................ 198 Computation of Direct and Overlapping Debt ...................................................................................................... 199 Legal Debt Margin Information ............................................................................................................................ 201 Pledged-Revenue Coverage .................................................................................................................................. 202 Demographic and Economic Information:
Demographic and Economic Statistics .................................................................................................................. 204 Employees by Industry .......................................................................................................................................... 205 Number of City Employees by Department. ......................................................................................................... 206 Operating Information:
Operating Indicators by Function. ......................................................................................................................... 207 Capital Asset Statistics by Function ...................................................................................................................... 208 Other reports:
Independent Auditor’s Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards......................................................................................................................... 209 7 PGCC 1-21-26
8 PGCC 1-21-26
City of Pacific Grove
300 Forest Avenue
Pacific Grove, California 93950
Telephone (831) 648-3100 Fax (831) 375-9863
December 18, 2025
Citizens and City Council,
The City of Pacific Grove (City) is submitting its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025, including an unmodified opinion from its independent auditors. State law and bond covenants require the City to obtain an annual audit of its financial statements. This annual report was prepared in accordance with accounting principles generally accepted in the United States of America. (GAAP).
Internal controls have been established to provide reasonable assurance regarding the reliability of reporting and compliance with applicable laws and regulations.
Management assumes responsibility for the contents in this report.
The ACFR is presented in three sections: introductory, financial, and statistical. The introductory section includes this transmittal letter, the City’s organizational chart and a list of municipal officers and officials. The financial section includes management’s discussion and analysis (MD&A), government-wide financial statements, fund financial statements, notes to the financial statements, and required supplementary information, as well as the auditor’s report on the financial statements and schedules.
The MD&A provides additional information regarding management of the City’s finances and should be read in conjunction with the transmittal letter. The statistical section includes selected financial and demographic information of the City.
Budget Process and Controls
In accordance with the City’s Budget and Financial Management Policy, the City Manager recommends the budget and presents it to the City Council in May. After public input and discussion is received, the City Council may request modifications to the budget or introduce an ordinance adopting the budget. The City’s budget is then adopted by ordinance and becomes effective on July 1st of each fiscal year.
Budgetary controls are set at the department level and are maintained to ensure compliance with the budget approved by the Board. The City Manager or the Administrative Services Director has the discretion to transfer between activities.
City Council approval is required for any overall increase in the budget for any fund or changes to the Capital Improvement Program.
All governmental, enterprise, and internal service funds are appropriated annually. The governmental funds include general, special revenue, capital project, and permanent funds. The Annual Comprehensive Financial Report includes all financial activities of the City. Financial data for all funds through which services are provided by the City have been included in this report. The City maintains an encumbrance accounting system as part of maintaining budgetary control. Encumbered amounts lapse at the end of the fiscal year. However, outstanding encumbrances are reappropriated as part of next year’s budget after staff review to determine if they are still needed. The guidelines used in developing the budget are recommended by the California Society of Municipal Finance Officers (CSMFO) and the Government Finance Officers Association (GFOA). 9 PGCC 1-21-26
City Profile / Demographics
The City is a small coastal community located in Monterey County that occupies just under three square miles, with a population of approximately 15,000 residents, ranked number 327 in size in California, ↓ 0.4% for the current year and ↓ 0.2% since 2020. Of the adults, 97% have high school degrees and 59% have college degrees, with an average household income of over $100K and median sales price of over $1 million, with 49% of the residential properties owner occupied.
Climate / Location
The City is situated on a peninsula which is bordered by Monterey, Pebble Beach, the Pacific Ocean, and Monterey Bay with a County unemployment rate of approximately 7%. Pacific Grove has a very temperate climate year round, with high temperatures ranging from the 70s in the late summer to the 50s in the winter. Pacific Grove has over 1,300 registered historical homes built prior to 1926.
Education
The Pacific Grove Unified School District (PGUSD) serves the City and portions of Pebble Beach. Based on the California Department of Education's Academic Performance Index scores, PGUSD has received the highest overall ranking of all public schools on the Monterey Peninsula. Schools within the district include Pacific Grove High School, Pacific Grove Middle School, Robert Down Elementary School, and Forest Grove Elementary School. Residents can take advantage of nearby colleges, including Monterey Peninsula College, the Middlebury Institute of International Studies at Monterey, California State University Monterey Bay, and the Hopkins Marine Institute operated by Stanford University. An educational profile is provided below.
Businesses / Additional Demographics
The City has a wide variety of businesses ranging from professional services to health care; and retail sales to lodging accommodations. Tourism is a key economic driver for the City, with a large number classified as either in the accommodation, food service or retail industries. Top employers within the City include the City and school district, Asilomar Hotel and Conference Center, three retirement communities and the local supermarkets. Hospitals in the vicinity include the Community Hospital of the Monterey Peninsula (CHOMP), Natividad Medical Center and Salinas Valley Memorial Hospital, while airports in the vicinity include Monterey Regional Airport, Marina Municipal Airport and San Jose International Airport. Additional demographics are below using the Quickfacts section of Census.gov:
Category Amount Category Amount
Persons 65 and older 29% Married 55%
Persons 0-18 / 19-64 16% / 55% Poverty Level 7.1%
Median Monthly Rent $2,384 Mean Travel Time to Work 21 minutes Persons per household 2.09 % in Workforce 56%
Community Attractions and Events
The City is home to many attractions, including Point Pinos Lighthouse, Hopkins Marine Station, Asilomar State Beach, Lovers Point Park and Beach, Butterfly House, the Monterey Bay Coastal Recreation Trail and Shoreline Park. The city also offers many special events during the year, including:
Good Old Days • Christmas at the Inns
Butterfly Parade • Farmers’ Market
Butterfly Ball • Holiday Parade of Lights
City 4th of July Celebration • Little Car Show
Monterey Bay Half Marathon • Holiday Tree Lighting
Pet Parade • Summer Lights
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City Government Structure and Services
Pacific Grove is a Charter City which was incorporated in 1889. The City operates under the Council-City Manager form of government with a seven-member City Council elected by the citizens. The Mayor is directly elected to serve a two-year term and Council members are elected to alternating four-year terms. The Council has the authority to establish all laws and regulations, subject only to the limits of the City Municipal Code and State legislation. The City Council appoints a City Manager to serve as the City’ s chief administrative officer. The City Manager provides direction to all City departments and ensures that all Council policies are implemented.
The City provides police protection, street, park and facility maintenance, recreational, planning, zoning, economic development, library, administrative and financial services for Pacific Grove. Fire protection services are provided through a contract with the City of Monterey. Additional services include sewer operations, a municipal golf course, Point Pinos Lighthouse, cemetery, a monarch butterfly sanctuary and habitat preserve, several local parks, trails and open space and a local water reclamation facility.
History
The natural advantages of settling along the Monterey
Peninsula were recognized thousands of years before Pacific Grove was founded. Native Americans, which are currently known as the Ohlone/Costanoan-Esselen Nation occupied the coastal and inland areas, which included Pacific Grove.
In 1852, development began when Congress commissioned the building of eight lighthouses on the West Coast. Pacific Grove’s Point Pinos location was selected as one of the first seven sites in California to receive a lighthouse. The construction of the Point Pinos Lighthouse was completed in 1854, with the lens installation taking place in 1855. The first lighthouse keepers lived a rugged life, with the town only accessible through forest and sand dunes. Supplies arrived periodically by sea, while the keepers also raised a portion of their own food.
During the 1870’s many small towns were founded in California. During that period, Pacific Grove was founded for a religious retreat. David Jacks, a wealthy landowner and rancher, owned most of the land that now constitutes Pacific Grove. In 1875, he consented to the development of a Methodist Christian Seaside Retreat on 100 acres of pine-covered coastal land. The Retreat was conceived as a place to worship in a quiet and beautiful natural environment. The first two-week Methodist camp meeting was held in August 1875, with annual meetings following for several decades. Other inhabitants included Chinese immigrants who established a thriving fishing village.
Gradually, sections of Mr. Jacks’ property were divided into lots, which later were sold for year-round homes and stores. By 1883, David Jacks sold his remaining Pacific Grove land, which included Point Pinos to the Pacific Improvement Company (PIC). The PIC was a subsidiary of the Southern Pacific Railroad which supported the development of a seaside resort to attract railway passengers. One of the PIC’s first accomplishments in Pacific Grove was to connect the town’s water supply to the Carmel River to ensure an adequate water system. The PIC also graded and leveled streets; surveyed lots, and established sewage, drainage, and trash pick-up.
As time went on, Pacific Grove began enticing more visitors. The first hotel opened in 1887, followed by the incorporation of the City and the addition of a railroad in 1889. Within ten years, the Pine Street School, the Hopkins Seaside Lab, and the Pacific Grove Bath House were built; and the community began to benefit from electric lights and a telephone exchange. Through a $10,000 Carnegie grant and a land donation, the City opened a public library in 1908. The Mission style Library, with expansive interior arches, is still actively serving the community. 11 PGCC 1-21-26
Selected Departmental Achievements – Current Fiscal Year The City strived to make progress on a number of significant goals previously established including the following, which address all of the City’s areas of focus. A significant portion of these goals are funded by the General Fund, with applicable portions being funded by grants and the City’s enterprise, capital and special revenue funds:
City Manager
Implemented an electronic performance management system Ongoing importing of contracts into Laserfiche (past & present) Continued implementation of the retention and recruitment plan Administrative Services – Information Services
Completed Cybersecurity Assessment project
Enhanced internet reliability and performance at the City Hall, PD, and Library Completed network and server upgrades, implement maps application Administrative Services - Finance
Received an award for excellence for the City’s Financials (ACFR) from GFOA Received awards for the City’s operating budget from GFOA and CSMFO Enhanced the transparency of the department's section of the City's website Community Development
Submitted second draft to the California Department of Housing (HCD) Offered next day inspection services, with a focus on the new downtown hotel Sought qualifying housing rehabilitation projects for use of CDBG funds Fire
Completed significant fire station upgrades including roof and tower repair Began Advanced Life Support (ALS) paramedic service
Began a Defensible Space program to inspect high fire severity zones Library
Successful efforts helped to support intergenerational events and programming Opened dialogue with local libraries about establishing partnerships Investigated the feasibility of developing a small/private meeting space for users Police
Maximized social media presence and expanded community outreach efforts Facilitated educational workshops on the dangers of opioids/fentanyl Hosted workshops on traffic safety, leverage technology, increase enforcement Public Works
Maintained over 600,000 SF of roadway, enhanced pedestrian safety Finalized sidewalk dining guidelines, completed sidewalk extension project Completed five Facility Conditions Assessments
Recreation
Added new Summer Sports - Junior Golf Camp and Basketball Camp Ensured continued availability of youth center throughout the school year Expanded existing Youth Soccer League adding an additional 70 registrations
Police
Downtown Pacific Grove
Fire Contract with Monterey
Lovers Point
Esplanade Park
Elmarie Dyke Open Space
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Key Departmental Goals – Next Two Fiscal Years
Despite limited resources available, the City has developed an ambitious work plan for the next two years including the following, which address the City’s Areas of Focus of Financial Sustainability, Infrastructure, Environmental Stewardship and Community Development. A significant portion of these goals are funded by the General Fund, with applicable portions being funded by grants and the City’s enterprise, capital and special revenue funds:
City Manager
Negotiate new MOUs for all bargaining units
Streamline the Business License application process
Implement a comprehensive community outreach program
Administrative Services – Information Services
Complete Next Phase of Cybersecurity Assessment project Implement Security Cameras at certain key locations
Implement Cloud Backup Solution to enhance Disaster Recovery capabilities Administrative Services - Finance
Select a vendor to assist the City with the selection of a new ERP system Issue interim financial and investment reports on a quarterly basis Continue to update the City website on a timely basis Community Development
Achieve HCD certification of the 6th Cycle housing element Initiate zoning ordinance amendments to streamline project reviews Complete grant funded local plan amendments addressing coastal hazards Fire
Install a new Station Alerting system compliant with County upgrades Place new fire engine in service
Continue efforts towards education and community fire risk reduction Library
Enhance the website with improved design and navigation, and updated content Look to develop a partnership with organizations to implement a literacy program Increase the number of intergenerational programs by 50% Police
Expand and modernize the department’s digital and social media presence Modernize internal training and leadership development Strengthen crime prevention through technology and community-led models Public Works
Finalize facility assessments, incorporate into 5 year Capital Improvement Plan Finalize Climate Action and Adaptation Plan
Begin development 10-year sewer master plan and associated user fee study Recreation
Evaluate programming to maximize participation
Continued with expanded youth basketball and soccer programs Enhance the online rental portal, to ensure seamless customer service Farmers Market
Chautauqua Hall
Arnett Park
Platt Park
Morris Dill Tennis Courts
Senior Center
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Ten Year Trend Information
Trend information is in the Annual Comprehensive Financial Report (ACFR) and budget. This data can show trends in operating revenues and expenses, which will impact the City’s ability to increase its reserves and fund capital projects in the future. Categories include:
• Financial Trends • Assessed Values • Demographic InformaƟon • Revenue Capacity • Tax Revenues • Economic InformaƟon • Debt Capacity • Fund Balances • OperaƟng InformaƟon
Budgetary Controls
In accordance with the City’s Budget and Financial Management Policy, the City Manager recommends the budget and presents it to the City Council in May and June. After public input and discussion is received, the City Council may request modifications to the budget or introduce an ordinance adopting the budget. The City’s budget is then adopted by ordinance and becomes effective on July 1st of each fiscal year. Budgetary controls are set at the department level for the general fund and fund level for all other funds and are maintained to ensure compliance with the budget approved by the Board. The City Manager or the Administrative Services Director has the discretion to transfer between activities. City Council approval is required for any overall increase in the budget for any fund or changes to the Capital Improvement Program.
All governmental, enterprise, and internal service funds are appropriated annually. The governmental funds include general, special revenue, capital project, and permanent funds.
The Annual Comprehensive Financial Report includes all financial activities of the City.
Financial data for all funds through which services are provided by the City have been included in this report. The City maintains an encumbrance accounting system as part of maintaining budgetary control. Encumbered amounts lapse at the end of the fiscal year. However, outstanding encumbrances are reappropriated as part of next year’s budget after staff review to determine if they are still needed.
Financial Policies
The City has established financial policies to provide guidance on several financial areas, including the following which are part of the adopted budget and summarized below. Budget and Financial Management (City Council Policy 400-6) Investments (City Council Policy 400-5)
Fees, Charges and Cost Recovery (City Council Policy 400-4) Category Policy
Balanced Budget OperaƟng Revenues >= OperaƟng Expenditures (Use of Reserves allowed to balance budget)
General Fund Reserves Recommended 25% of Budgeted Expenditures Golf Fund Reserves Recommended 25% of Revenues of the Golf Fund Pension / Capital Reserves Recommended $1 million minimum for each Sewer Fund Reserves Recommended Two Years Funding of Capital Projects Worker’s CompensaƟon Fund At least 75% of total fund liabiliƟes Liability Insurance Fund At least 75% of total fund liabiliƟes Year End Surplus Ensure General Fund (GF)/Insurance Reserves are met, with remainder allocated 1/3 to Pension Reserve, Capital Reserve and GF Reserves Berwick Park
Butterfly House
Seven Gables Inn
14 PGCC 1-21-26
Risk Management
The City is a member of the California Joint Powers Insurance Authority (the “Authority”). The Authority is composed of 124 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The Authority arranges and administers programs for the pooling of self-insured losses, purchases excess insurance and reinsurance, and arranges for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978.
Each member government has an elected official as its representative on the Authority’s Board of Directors. The Board operates through a nine-member Executive Committee. During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage.
Appropriations Limit
Under Article XIII-B of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Beginning in Fiscal Year 1990-91, the appropriations limit is required to be calculated bas ed on the limit for the fiscal year 1986-87, adjusted for a.) either the annual percentage change of the jurisdiction’s own population or the annual percentage change in population of the county where the jurisdiction is located and b.) an inflation factor either being the annual percentage change in per capita personal income or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The City’s appropriations remain under this limit.
Appendix
Included in the appendix of the Budget is a list of key acronyms, a glossary with key terms used in the documents and an index to key sections of the documents. The appendix of the Budget also includes calculations of the annual appropriations limit, detailed information on debt obligations, and resolutions adopting the budget and appropriation limit.
Awards
The City has received from GFOA and from the California Society of Municipal Finance Officers (CSMFO) awards for excellence in reporting for its budget and from GFOA for its ACFR and Popular Annual Financial Report (PAFR). These awards focus on providing high quality documents for the citizens, City Council, customers, regulators and other interested parties. The City will submit the budget to GFOA and CSMFO and the ACFR/PAFR to GFOA in accordance with their award programs.
Acknowledgements
We wish to recognize the City Council for their leadership, support and commitment to fiscal sustainability and longterm financial planning. We also express appreciation to all departments for providing sound fiscal management and their assistance with preparation of the ACFR and budget, with special thanks to the staff of the Finance Division of the Administrative Services Department who assisted with the preparation of both.
Respectfully submitted,
Matt Mogensen Fred Marsh
City Manager Administrative Services Director
Lovers Point
Recreation Trail
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Pacific Grove
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
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City of Pacific Grove Budget
City Organization Chart
Fiscal Year 2024-25
City Attorney
(Contract)
Boards and
Commissions
Administrative
Services
Police
City Manager's Office Fire
• City Clerk • Plan Review • Administrative Enforcement Hearing Officer • Economic Development • Fire Suppression • Architectural Review • Human Resources • Disaster Preparedness • Beautification and Natural Resources • Outreach • Emergency Medical Aid • Diversity, Equity and Inclusion • Downtown Business Improvement District
Administrative Services Police • Historic Resources
• Administrative Services • Police • Hospitality Improvement District • Finance / Risk Mgmt • Animal Control • Library
• Cemetery • Records • Museum
• Information Services • Parking • Planning
• Recreation
Community Development Public Works • Site Plan Review
• Community Development • Public Works • Traffic Safety • Planning • Buildings / Grounds • Other Ad Hoc Committees • Building (Contract) • Capital Improvements • Zoning Administrator • Code Compliance • Golf Course / Lighthouse
Boards/Commissions
Mayor and City Council
Residents of the City of Pacific Grove
City Manager's
Office
Museum
(Contract)
Fire
(Contract)
Recreation
Community
Development
Public Works
City Manager
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City of Pacific Grove
Principal Officials
Fiscal Year 2024-25
Department Heads
Administrative Services: Fred Marsh Police: Casey Day
City Clerk: Sandra Kandell Community Development: Jon Biggs Human Resources: Leticia Livian Public Works: Daniel Gho Library: Rachel Gaither Fire (Contract): Andrew Miller
Nick Smith
Mayor
Joe Amelio
Councilmember
Cynthia Garfield
Councilmember
Lori McDonnell
Councilmember
Chaps Poduri
Councilmember
Tina Rau
Councilmember
Paul Walkingstick
Councilmember
Matt Mogensen
City Manager
Brian Pierik
City Attorney
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City of Pacific Grove
Map of Pacific Grove and the
Monterey Peninsula
PGCC 1-21-26
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6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707 INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and the Members of the City Council of the City of Pacific Grove
Pacific Grove, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Pacific Grove, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (“Government Auditing Standards”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matters
Prior Period Adjustments
As discussed in the Note 16 to the basic financial statements, the City also recorded prior period adjustment in the governmental activities and business-type activities in the amount of $1,162,521 and $3,576, due to correction of recording unearned revenue in the ARPA fund and Capital Improvement Project funds in amount of $821,953 and $123,575. In addition, the revenue correction was made in amount of $216,993 in the general fund. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
PGCC 1-21-26
To the Honorable Mayor and the Members of the City Council of the City of Pacific Grove
Pacific Grove, California
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we • exercise professional judgment and maintain professional skepticism throughout the audit. • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. • evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedules – General Fund and Major Special Revenue Funds, the Schedule of Proportionate Share of Net Pension Liability, Schedule of Contributions - Pensions, and the Schedule of Changes in Net OPEB Liability and Related Ratios be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 22 PGCC 1-21-26