Pacifica City Council
May 9, 2022

DISCUSSION

1. Introduction and Background:

In 1993, the voters of the City of Pacifica adopted Ordinance No. 604-C.S. to add a new Chapter 5 of Title 9 of the Pacifica Municipal Code (“PMC”). The ordinance is known as the City of Pacifica Growth Management Ordinance (GMO). The GMO contains three main components:

1. A requirement for voter approval of any a) rezoning out of the A (Agricultural) zoning district; b) change of the “B” Lot Size Overlay District associated with an A-zoned parcel; or, c) change to the uses or structures permitted on an A-zoned parcel.

2. A requirement for voter approval of any a) rezoning out of the HPD (Hillside Preservation District) overlay zoning district; or, b) change to the standards governing the HPD overlay zoning district in Chapter 4 of Title 9 of the PMC.

3. A residential development allocation (RDA) process that a) establishes an annual allotment of 70 new residential units per year; b) exempts certain types of dwelling units from the requirement to obtain an RDA; and, c) imposes distribution and phasing criteria for the allocation of RDAs.

As enacted by the voters, the GMO had an initial termination date of June 30, 1997. The City Council has adopted several ordinances to extend the termination date of the GMO, most recently with the enactment of Ordinance No. 817-C.S. in 2017 to extend the GMO for five years until June 30, 2022.

Staff proposes extending the GMO for five years—to June 30, 2027—and making clarifying changes so that the dates referenced in PMC Sections 9-5.07 [Agricultural land] and 9-5.08 [Hillside protection] also reflect the five-year extension. Staff proposes not making any changes to the RDA provisions specified in PMC Sec. 9-5.03 [Annual allotment], Sec. 9-5.04 [Exemptions], Sec. 9-5.05 [Allocation]; and Sec. 9-5.06 [Distribution and phasing], as these provisions are not currently enforceable under Senate Bill 330 (“SB 330”).

2. RDA Provisions
The proposed GMO would leave in place the existing provisions of Sections 9-5.03 through 9-5.06 of the PMC related to the RDA process. The City is currently unable to enforce these provisions due changes in state law that took effect following the City’s last extension of the GMO in 2017. Specifically, under the Housing Crisis Act of 2019 (“HCA”), enacted via SB 330 in 2019, the City is prohibited from establishing or implementing any provision that “Limits the number of land use approvals or permits necessary for the approval and construction of housing that will be issued or allocated within all or a portion of the affected county or affected city…” or that “Acts as a cap on the number of housing units that can be approved or constructed either annually or for some other time period.” Government Code section 66300(b)(1)(D). For this reason, staff does not recommend making any clarifying changes to the RDA 2 Packet Pg. 70

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Packet Pg. 214 Attachment: Attachment C - Planning Commission Staff Report (without attachments) - April 18, 2022 (4979 : Introduce Growth Management PC Staff Report
Growth Management Ordinance of the Pacifica Municipal Code April 18, 2022

provisions at this time. This will enable the City to retain the RDA provisions for future implementation when permissible under state law, as the HCA contains a sunset date of January 1, 2034. However, until the HCA sunsets, the City will be unable to implement the RDA provisions.

3. Proposed Modifications:

The existing provisions of the GMO, codified in Chapter 5 of Title 9 of the PMC, are included with strikethrough and underline showing deletions and additions, respectively, in Attachment B. The proposed ordinance would extend the overall GMO for five years and make clarifying changes reflecting the ongoing enforceability of the voter approval requirements for changes to the A (Agricultural) and HPD (Hillside Preservation District) zoning districts by updating the dates referenced in these specific provisions (PMC Sections 9-5.07 [Agricultural land] and 9-5.08 [Hillside protection]. The new termination date established in the proposed ordinance would be June 30, 2027.

Overall Growth Management Ordinance Termination Date
The proposed ordinance would amend Section 9-5.11 of the PMC to extend the termination date of the GMO by five years to June 30, 2027.

A (Agricultural) and HPD (Hillside Preservation District) Voter Approval Requirements The proposed ordinance would amend Sections 9-5.07 and 9-5.08 of the PMC related to requirements for voter approval to modify A (Agricultural) and HPD (Hillside Preservation District) zoning classifications and standards, respectively, to clarify that these provisions would remain in effect through June 30, 2027.

4. Staff Recommendation:

Staff recommends adoption of the resolution included as Attachment A to initiate Text Amendment TA121-22 and to recommend City Council approval of an ordinance to extend certain provisions of the GMO for five years as outlined above in Section 2 of this staff report.

MOTION FOR APPROVAL:

Move that the Planning Commission FINDS the proposed ordinance is exempt from the California Environmental Quality Act; ADOPTS the resolution included as Attachment A to the staff report to initiate Text Amendment TA-121-22 and recommend approval to the City Council; and, INCORPORATES all maps and testimony into the record by reference.

ATTACHMENT LIST:

Attachment A - Draft Resolution to Initiate Text Amendment and Recommend City Council Approval of Ordinance to Extend Growth Management Ordinance (DOCX) Attachment B - Current Growth Management Ordinance with Redlines - PMC Title 9, Chapter 5 (DOCX)
2 Packet Pg. 71

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Packet Pg. 215 Attachment: Attachment C - Planning Commission Staff Report (without attachments) - April 18, 2022 (4979 : Introduce Growth Management Planning Commission Minutes
April 18, 2022

2. TA-121-22 File No. 2022-008 – Text Amendment TA-121-32, initiated by the City of Pacifica, to extend the Growth Management Ordinance codified in Chapter 5 of Title 9 of the Pacifica Municipal Code, which has a current termination date of June 30, 2022. The Text Amendment to be considered would affect property citywide in the A (Agricultural) zoning district and the HPD (Hillside Preservation District) overlay zoning district. The Planning Commission will consider the Text Amendment and make a recommendation to the City Council
Recommended CEQA Action: Exempt pursuant to CEQA
Guidelines Section 15061(b)(3).

Dep. Planning Director Murdock presented the staff report.

Commissioner Domurat stated that the big picture in his mind was that they extend it for five years, and they have a master plan they are working on, and he asked if they are being synced together and the five years doesn’t lock them in if they want to make changes to the master plan.

Dep. Planning Director Murdock thought there were two parts to the answer. He stated that the first part of his question is related to whether they are in sync and could they revisit this as a city if a five year extension doesn’t make sense in the future and yes, the ordinance is being enacted by City Council and can be amended by the Council but he stated that it would be unconventional and he wasn’t aware of any example where that has occurred since the initial and subsequent extensions. He stated that the second part of his question was about to what extent this ordinance affects the capacity of the city to comply with its regional housing needs allocation or RHNA for the nearly 1,900 units the city is obligated to plan for over the next eight years and the simple answer was that this ordinance and the HPD overlay do not regulate uses of land per se or limit density and this is governing the voter approval requirements to remove that zoning overlay such as the Hillside Preservation District. He stated that the General Plan and zoning that combines with this overlay is what regulates the density and allowable uses of land which is still subject to Council’s discretion.

Commissioner Godwin noticed that a number of the documents, such as financial statements, etc., were quite a ways in the past and he thought they should insert some statement in subsequent to that, so they indicate that they are aware of more recent documents and this ordinance is compatible with all the budgets from then until the present.

Dep. Planning Director Murdock thought it was staff’s opinion, in perspective, that this ordinance and the prior extension ordinances are simply reauthorizing the prior ordinance that was enacted by the voters and they thought it would be advisable to remain consistent with those prior extensions to add a five-year term but not seek to go back and change various components such as the finding section.

Commissioner Godwin reiterated that much more modern documents are available and they haven’t done anything to update the findings.

Dep. Planning Director Murdock thought a recital in the Planning Commission’s resolution, if they take action to recommend this, might be a place to reflect his opinion and judgment on that and that would not require amending those findings and he and Asst. City Attorney Sharma can

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Packet Pg. 216 Attachment: Attachment D - Planning Commission Meeting Minutes - April 18, 2022 (4979 : Introduce Growth Management Ordinance Planning Commission Minutes
April 18, 2022

discuss further as a potential option if they understood more about specific elements that he thinks need to be validated or addressed in that statement.

Acting Chair Hauser had some questions that she appreciated staff answering in advance of the meeting, but she has one to ask on the record. She wanted to understand the thought process behind the five years versus 20 years or 10 years.

Dep. Planning Director Murdock stated that in the original growth management ordinance, the voters provided for a five-year initial term to the GMO and each extension since then has been a five-year extension and, in this instance, staff prepared the ordinance consistent with the original GMO as well as the multiple extensions and staff’s opinion was that a five-year term is an adequate balance of certainty and protection combined with the ability and requirement in the ordinance to revisit it after a three-year period to determine whether it should remain in place at the end of the five-year term. Consistency with the original enactment and subsequent extensions is their justification for recommending a five-year term.

Acting Chair Hauser opened the Public Hearing.

Sue Digre, Pacifica, stated that she was in favor of a mask but it is hard to hear and she couldn’t hear about three-quarters of what he said. She appreciated Dep. Planning Director Murdock’s support of the public vote, and expressed her thoughts on that position.

Asst. Planner Mosler introduced the call-in speaker.

Christine Boles, Pacifica, thanked Dep. Planning Director Murdock for bringing this ordinance to the Commission’s attention and shared her thoughts on the process of that ordinance, and appreciated keeping the will of the people at the forefront and encouraged reinstating it again.

Acting Chair Hauser closed the Public Hearing.

Acting Char Hauser referred to a point brought up in public comment, and stated staff wrote up very nicely the residential development allocation (RDA) process and explained it in the context of the Housing Accountability Act. She wondered if they could get more insight into how that works and understand when the voters would have the rights again, based on the Housing Accountability Act, to implement the RDA process.

Dep. Planning Director Murdock stated that, among the many provisions in the Housing Accountability Act that was first enacted in SB330, one is express language in the statute that prohibits cities from implementing and administering any numerical cap on the number of housing units that can be permitted or constructed and that is the language staff is responding to in drafting this report and making recommendations on the ordinance. He stated that, as far as the point at which the voters will have their authority returned to them and allow the application and administration of this process that is in Pacifica’s Municipal Code, the current sunset date is January 1, 2034 but the Legislature could modify that and make it sooner or later. He stated that there was no guarantee that the sunset will occur at that point in time, but under current law that is the date.

Acting Chair Hauser stated that, if there are no items on which Commissioners wish to speak, she would ask for a motion. She then acknowledged Commissioner Ferguson.

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Packet Pg. 217 Attachment: Attachment D - Planning Commission Meeting Minutes - April 18, 2022 (4979 : Introduce Growth Management Ordinance Planning Commission Minutes
April 18, 2022

Commissioner Ferguson stated that she asked the question he was going to ask.

Acting Chair Hauser then asked if he would like to make the motion.

Commissioner Ferguson moved that the Planning Commission FINDS the proposed ordinance is exempt from the California Environmental Quality Act; ADOPTS the resolution included as Attachment A to the staff report to initiate Text Amendment TA-121-22 and recommend approval to the City Council; and incorporates all maps and testimony into the record by reference.

Acting Chair Hauser stated that, as Commissioner Ferguson was reading the motion, she recalled that Commissioner Godwin may want to add a finding into the resolution. She asked him if he was interested in adding that.

Commissioner Godwin was interested in seeing some reaction to it if the other commissioners thought that was a reasonable approach, given some of the documents mentioned are in excess of 40 years, etc.

Acting Chair Hauser asked Asst. City Attorney Sharma if she had a response to that.

Asst. City Attorney Sharma stated that their office generally recommends that consistency with the prior approach of merely extending the dates in the ordinance and the findings remain as is, but if the Commission wishes to entertain any additions or proposals, they can consider the exact precise language. She can’t think of a way to incorporate a footnote to revise it in a way that doesn’t touch or reopen the findings.

Acting Chait Hauser stated that they have the motion from Commissioner Ferguson, and asked for a second.

Commissioner Domurat seconded the motion.

The motion carried 5-0.

Ayes: Commissioners Domurat, Ferguson, Godwin,
Wright and Acting Chair Hauser
Noes: None

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Packet Pg. 218 Attachment: Attachment D - Planning Commission Meeting Minutes - April 18, 2022 (4979 : Introduce Growth Management Ordinance 1 Murdock, Christian
From: Cindy Abbott < >
Sent: Monday, April 18, 2022 12:03 PM
To: Public Comment
Subject: Support for Extending the Growth Control Ordinance (Item 2, Planning Commission April 18, 2022 Agenda)
[CAUTION: External Email]

To:  Pacifica Planning Commissioners,

I was pleased to see that the Growth Management Ordinance is on the agenda for this evening's Planning Commission meeting (Item 2 of the Agenda), in advance of its current expiration (on June 30, 2022).  I am writing today to express my strong support for the staff recommendation to extend the timing of the Ordinance for five years to June 30, 2027.

The Ordinance contains provisions requiring a public vote to re‐zone Agricultural and Hillside Preservation District parcels.

The citizens of Pacifica dedicated time and energy to enact these provisions and it was the voters who re‐ enacted the Ordinance by an overwhelming majority after a previous City Council allowed it to lapse in the early 1990’s.  The GMO has remained in force since that time with prior commissions and council extending the provisions, as you are being asked to do today.

The Growth Management Ordinance is a critical tool for the City and upholds the community's longstanding commitment to ensuring responsible planning and  care deeply about this Ordinance.  I thank you in advance for voting to recommend its extension.

Cindy Abbott
West Sharp Park, Pacifica
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Packet Pg. 219 Attachment: Attachment E - Public Comments Received After Planning Commission Agenda Publication (4979 : Introduce Growth Management 1 Murdock, Christian
From: Jerry Clements < >
Sent: Sunday, April 17, 2022 6:16 PM
To: Elizares, Jennifer
Subject: Re: Full Agenda - Apr 18, 2022 (Mon) - Planning Commission [CAUTION: External Email]

To all Planning Commissioners:

If the Planning Department, Planning Commission, and City Council wish to avoid profound embarrassment, all these groups need to review the absurd formula contained in the HPD ordinance.  It prohibits ANY DEVELOPMENT WHATSOEVER on our 8.5 acre parcel on Barton Place which has 300 feet of street frontage.   Plans for two houses have been prepared showing minimum disturbance to the hillside, with the amount of grading for each house the same as for a normal swimming pool.   The vast portion of the site remains "preserved".

I am resolved to engage the media with this entertaining and preposterous matter if the ordinance moves forward in its current form.  Your Planning Department is aware of the implications of this formula but has steadfastly embraced it.

Jerry Clements
Registered Civil Engineer No.14030
On Wed, Apr 13, 2022 at 7:43 PM Jennifer Elizares <[email protected]> wrote:

Please see the attached Full Agenda document for the following meeting:

Planning Commission
Regular
Monday, April 18, 2022 7:00 PM
2212 Beach Blvd, Pacifica, CA 94044
Download PDF Full Agenda  |  View Web Full Agenda
Document Modified: 4/13/2022 7:33 PM

Please note that the Full Agenda has NOT been finalized and changes may be made before the meeting date.

If you no longer wish to be included in this distribution list you can remove yourself through the meeting web portal or reply to this message.

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Packet Pg. 220 Attachment: Attachment E - Public Comments Received After Planning Commission Agenda Publication (4979 : Introduce Growth Management 1 Murdock, Christian
From: James Kremer < >
Sent: Friday, April 15, 2022 4:23 PM
To: Murdock, Christian; Woodhouse, Kevin
Cc: O'Connor, Bonny
Subject: Question about tricky legal wording in the GCO (Item #2 PC meeting) [CAUTION: External Email]

P.S. (pre‐script!) I was unable to find email for Ms Kenyon on the City web site; no hits at all for “Kenyon” even though the Legal page lists her by name. Would you please forward this. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
I have a technical – perhaps legal – question about the Growth Control Ordinance on Monday’s PC Agenda (Item 2). I was pleased to see a “redlined” version provided (well, blue lined! ϠϡϢ). It is clear that only minor changes of expiration dates is being proposed. I am pleased that this is being renewed, as the GCO is very important, along with the HPD.

I had trouble parsing the wording in Sec. 9‐5.08 HPD (and the previous on on Ag land, 9‐5.07). It seems ambiguous to me and while the legal interpretation may be clear, to me the English is not. I hope you can clarify it.  & Perhaps the wording should be modified slightly to avoid confusion?
Here is the section at question with my own emphasis (indeed, redlined!). (there are parallel questions for Sec 9‐5.08 on Ag)
Sec. 9‐5.08. Hillside protection.

In order to maximize public participation in rezoning decisions concerning development of sensitive hillside lands, in order to preserve areas of open space where possible and to retain natural terrain by encouraging the concentration of dwellings and other structures on their sites, to help protect people and property from potentially hazardous conditions particular to hillsides, and to insure that development is compatible with the unique hillside resources of Pacifica, through June 30, 20271977:

1. (a)  All land within the City which is zoned or designated Hillside Preservation District on the zoning maps of the City as set forth in Chapter 4 of Title 9 of the Pacifica Municipal Code on or after the effective date of the ordinance codified in this chapter may not be rezoned out of the Hillside Preservation District without a vote of the people.

2. (b)  The standards governing the Hillside Preservation District shall be the standards specified in the provisions of Chapter 4 of Title 9 of the Pacifica Municipal Code on the effective date of the ordinance codified in this chapter, unless otherwise approved by a vote of the people. (§ 1, Ord. 604‐C.S., eff. July 8, 1993)

1. The key to my confusion is the specification of the “effective date of the ordinance codified in this chapter”. Ch 4 of Title 9 is the HPD itself. Ch 5 of Title 9 is the GCO that we are reading.

Q: What is the intent of the word “this”?  Note that the sentence itself points to Ch 4, i.e. the HPD. However, the context of this paragraph/section leaves open the possibility that it refers to Ch 5, the GCO.

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Packet Pg. 221 Attachment: Attachment E - Public Comments Received After Planning Commission Agenda Publication (4979 : Introduce Growth Management 2 This seems unfortunately ambiguous, and it may just be prudent to clean it up. However, I foresee a scenario where this ambiguity could cause real problems –

2. I have studied the HPD and have written City officials on it more than once. We all agree on its importance, but I feel that there are a number of places in the verbiage where small improvements could be made to eliminate ambiguity and provide definitions or clarification of critical terminology. I have suggested that this be addressed in the near future.

My question is:  If the City Council were to make changes to the HPD to improve detailed wording and enforce the intent, how would such updates be affected by the “effective date...” that is specified in paragraphs (a) and (b) in this section (and Sec. 9‐5‐07)?
I think changes to the HPD require a public vote, so perhaps the “without a vote of the people” would be already have happened, so that the change in "this”  chapter (GCO, Sec 9‐5) might somehow already be met? Still, it does seem to me to be unclear how changes to HPD would impact the intended “effective date” on one or the other "ordinance codified in this chapter."
Lastly,

3. The blue‐line changes in the new version extends the GCO to 2027. The prior version of the Ag section was 1997. But the prior version of the HPD section is shown as 1977.  I’m just checking that this is not a misprint. I thought these updates were on a 5 year timetable, so the 20 yr lapse for Sec. 9‐5.08 seem surprising.

Again, I fully support the renewal of the GCO as well as the strong intent of the HPD. Thank you for addressing this important issue.
-- Jim
James Kremer
Pacifica, CA
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Packet Pg. 222 Attachment: Attachment E - Public Comments Received After Planning Commission Agenda Publication (4979 : Introduce Growth Management 1 Murdock, Christian
From: Dinah Verby < >
Sent: Friday, April 15, 2022 7:13 PM
To: Public Comment
Cc: Murdock, Christian; Dinah Verby
Subject: Planning Comm 4-18-22 (Item 2- Growth Management Ordinance) [CAUTION: External Email]

Dear Planning Commissioners,

I am writing to support the extension of the Growth Management Ordinance (Item 2 of the Agenda) as recommended by staff.

I want to thank staff for bringing this item forward. The Ordinance contains provisions requiring a public vote to re‐zone Agricultural and Hillside Preservation District parcels.

The citizens fought for these provisions and it was the voters who re‐enacted the Ordinance by an overwhelming majority after a previous City Council allowed it to lapse in the early 1990’s.

Pacificans care deeply about this Ordinance and I thank you in advance for voting to recommend its extension.

Sincerely,

Dinah Verby
CAUTION: This email originated from outside of the City of Pacifica. Unless you recognize the sender's email address and know the content is safe, do not click links, open attachments or reply.

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Packet Pg. 223 Attachment: Attachment E - Public Comments Received After Planning Commission Agenda Publication (4979 : Introduce Growth Management

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Packet Pg. 224
Attachment: Attachment F - Public Comment Received Prior to City Council Agenda Packet Publication (4979 : Introduce Growth Management

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Packet Pg. 225
Attachment: Attachment F - Public Comment Received Prior to City Council Agenda Packet Publication (4979 : Introduce Growth Management

CHAPTER 5. GROWTH CONTROL
Sec. 9-5.01 Title.

This chapter may be cited as the "City of Pacifica Growth Management Ordinance." (§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.02. Findings.

The voters of the City do find and declare as follows:
(a) Improperly managed residential growth within the City could adversely affect the City's capacity to provide adequate services to accommodate that growth. In particular, improperly managed residential growth could result in an overburdening of the City's sewage treatment facility, increased traffic congestion on streets and freeways, inadequate levels of police and fire protection, and adverse impacts on water resources and drainage systems.
(b) It is the intent of voters of the City to prevent these harms, to control the distribution and rate of growth of the City and to prevent the overextension of City services by adopting measures to properly manage the rate of residential growth within the City. Such measures will promote the public health, safety and welfare by ensuring that services provided by the City and other utility and service agencies operating in the City can be properly and effectively staged in a manner that will not overextend services and will allow the opportunity for deficiencies in existing services to be brought up to required and necessary standards as new development is approved and fees are collected for establishment of these services.
(c) Measures to control the rate of residential growth in the City are necessary to: insure that residential development does not outpace the City's ability to provide adequate and necessary services, prevent increased traffic congestion on Highway 1 and key intersections, preserve the quality of life of the community, and where possible to properly manage the process and timing of the conversion of open space resources and agricultural land to other uses.
(d) The City's available fiscal resources are set forth in the following documents: FY 1992—1993 Budget, City of Pacifica; 1992—1993 Financial Statement, City of Pacifica. (e) The City's environmental resources are described in the City of Pacifica General Plan, the City of Pacifica Local Coastal Land Use Plan, and the 1988 City of Pacifica Open Space Task Force Report. (f) The specific housing programs and activities being undertaken by the City are set forth in the 1990 Housing Element of the City of Pacifica as amended in 1992, which is incorporated by this reference.

These include programs to preserve low and moderate income housing and subsidized and assisted housing developments, to promote the maintenance and rehabilitation of substandard units, to promote second residential units and mixed use developments, to use City resources to develop affordable housing and to provide incentives such as density bonuses for affordable housing. (g) The potential development of lands zoned Agricultural and/or Hillside Preservation District (HPD) is of City-wide interest due to the size, location, visibility, slope, and/or current or potential agricultural productivity of such lands. These features make such lands different in character than other property in the City, and it is therefore reasonable that such lands be rezoned by means of procedures which will afford the widest possible public participation and input. Therefore, it is appropriate to adopt measures that will allow for a City-wide public vote on a proposal to rezone lands zoned "Agricultural" or "Hillside Preservation District" for purposes of significant development.

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Packet Pg. 226 Attachment: Attachment G - Current Growth Management Ordinance with Redlines - PMC Title 9, Chapter 5 (4979 : Introduce Growth

(h) Pacifica's Housing Element, adopted in November 1990, identifies Pacifica's share of the regional housing need. According to the Association of Bay Area Governments' (ABAG) 1989 publication entitled, Housing Needs Determinations, San Francisco Bay Region, Pacifica's fair share of the regional housing need between 1988 and 1995 is eight hundred eleven (811) units, or one hundred sixteen (116) units per year during the seven-year period. The proposed residential growth management ordinance will allow the building of at least seventy (70) units per year, in addition to exemptions for single-family dwellings on individual infill lots, affordable housing, housing for the elderly and/or disabled and mixed use. Therefore, the Growth Control Management Ordinance will not have an adverse impact on the City's ability to meet its share of the regional housing need, because the exemptions will provide more than enough permits to accommodate Pacifica's housing need for all income categories.
(i) The Growth Management Ordinance provides exemptions for affordable housing, housing for the elderly and/or disabled, second residential units, mixed uses and single-family dwellings on individual properties. These exemptions, along with the seventy (70) permits per year allowed by the Growth Management Ordinance, will allow the City to keep pace with the growth rate of the past decade. In addition, none of the surrounding communities (Daly City, San Bruno, South San Francisco) has adopted growth control measures, and the growth control measures adopted by San Mateo County for its unincorporated areas in the coastal zone have not been a constraint to housing development.

Therefore, the proposed ordinance will not reduce housing opportunities in the region and Pacifica's Growth Management Ordinance will not have an impact on the region. In fact, the ordinance will work to increase housing opportunities by encouraging housing for lower income people, the elderly, and disabled.
(j) In order to meet its housing goals, including its fair share of the regional housing need as established by ABAG, Pacifica has adopted a Housing Element that contains housing programs and activities for the maintenance, improvement, and preservation of housing.
(k) In the process of formulating, reviewing and adopting the Growth Management Ordinance, the City has considered the effect of the Growth Management Ordinance on the housing needs of the region and has balanced these needs against the public service needs of its residents and available fiscal and environmental resources, concluding that the needs of its citizens can best be met by the adoption of this ordinance without adversely impacting the housing needs of the region. (l) It is in the best interests of the City, in order to protect the health, safety, and general welfare of its citizens, to control the rate of new residential growth within the City by establishing an annual maximum number of new dwelling units authorized by building permits during each fiscal year, except where exempted herein.
(m) An annual maximum number of seventy (70) new dwelling units each year, in addition to those exempted from this chapter, will provide a supply of new housing consistent with the City's fiscal, environmental, and physical resources and capabilities and will enable Pacifica to meet its regional housing needs for all economic segments.
(n) The Growth Management Ordinance implements the policies of the City's General Plan and zoning ordinance and is fully consistent therewith.

Accordingly, the voters of the City of Pacifica do hereby ordain as follows in Sections 9-5.03 through 9-5.11. (§ 1, Ord. 604-C.S., eff. July 8, 1993)

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Packet Pg. 227 Attachment: Attachment G - Current Growth Management Ordinance with Redlines - PMC Title 9, Chapter 5 (4979 : Introduce Growth

Sec. 9-5.03. Annual allotment.

Except where dwelling units are exempt from this chapter pursuant to Section 9-5.04, no building permit shall be issued for a new dwelling unit until a residential development allocation (RDA) has been issued by the City.

During each fiscal year (commencing July 1st and ending June 30th) through June 30, 1997, the number of residential dwelling allocations for new dwelling units to be authorized by building permits in the City shall not exceed seventy (70) units. Each dwelling unit shall require one residential development allocation on a one-for-one basis.
(§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.04. Exemptions.

The following developments are exempt from the requirement to obtain a residential development allocation prior to issuance of a building permit pursuant to Section 9-5.03 of this chapter:
(a) Replacement, repair, remodeling or expansion of an existing dwelling unit on a one-for-one basis provided no additional dwelling units are created; and
(b) Exclusively commercial, industrial or agricultural projects; and (c) One single-family dwelling unit on an individual existing lot; and (d) Affordable dwelling units, as defined in the City's Density Bonus Ordinance, Pacifica Municipal Code, Title 9, Article 41. Such units shall be maintained at the rent or resale price levels established in the City's Density Bonus Ordinance and shall continue to be maintained at those levels for the time periods established therein;
(e) Dwelling units exclusively for the elderly and/or disabled as defined in the City's Density Bonus Ordinance, Pacifica Municipal Code, Title 9, Article 41. Such units shall remain available for elderly and/or disabled persons for the time periods established in the Density Bonus Ordinance; (f) Accessory dwelling units and junior accessory dwelling units as defined by the City's Accessory Dwelling Unit Ordinance, Pacifica Municipal Code, Title 9, Article 4.5; (g) Accessory dwelling units in the same structure as a commercial use in a commercial zoning district pursuant to the criteria set out in Pacifica Municipal Code, Title 9, Article 10; (h) All exemptions previously authorized under the provisions of Ordinances Nos. 322-C.S., 590-C.S. or 597-C.S.
(§ 1, Ord. 604-C.S., eff. July 8, 1993, as amended by § 20, Ord. 825-C.S., eff. November 8, 2017; § 14, Ord. 854-C.S., eff. February 26, 2020)
Sec. 9-5.05. Allocation.
(a) To implement the policies of this chapter, the City shall establish a procedure for the allocation of residential development allocations.
(b) The allocation procedure shall include a competitive allocation procedure to provide for the allocations in any fiscal year when the number of residential development allocations sought exceeds the number of residential development allocations which are available. The competitive allocation procedure shall implement the policies of this chapter and shall include criteria and a ranking process. Criteria shall include, but not be limited to, the following: ability of public facilities, utilities and services to meet the demands created by the project, presence or absence of adverse environmental impacts, site and architectural design quality, the provision of private or public usable open space, consistency with neighborhood character, and

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Packet Pg. 228 Attachment: Attachment G - Current Growth Management Ordinance with Redlines - PMC Title 9, Chapter 5 (4979 : Introduce Growth

provision of affordable housing, senior housing and housing for the disabled. The Planning Commission shall consider each application for a Residential Development allocation at a public hearing and evaluate and rank the applications according to these criteria. The Planning Commission recommendations shall be forwarded to the City Council for review and approval. At a public hearing, the City Council shall consider the Planning Commission's recommendations and ranking. The City Council shall then adopt a final ranking list and award Residential Development Allocations pursuant to that list. The City Council may adopt, reject or modify the recommendations and ranking of the Planning Commission. (c) When the number of available residential development allocations exceed demand, the City Council may issue residential development allocations without following the competitive evaluation system process set forth in subsection (b) above.
(d) Unused allocations shall accrue from year to year. Allocations which, on the effective date of this chapter, are available and unallotted under prior Ordinances 322-C.S., 590-C.S., 597-C.S., or 603-C.S., shall be carried over and shall be available for allocation pursuant to this chapter. (e) Expiration. A residential development allocation shall expire on June 30 of the next fiscal year succeeding the year of issuance unless a building permit is issued prior to its expiration date. Upon expiration, the residential development allocation shall become available for re-allocation. (f) Extension. A residential development allocation may be extended by the City Council for a period not to exceed one year, provided that prior to the expiration of the residential development allocation, an application for an extension is filed with the Planning Department. The City Council may grant or deny a request for an extension. No public hearing shall be required for such an extension. (§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.06. Distribution and phasing.
(a) To insure an equitable distribution of building permits and to encourage in-fill development, no applicant may receive more than twenty (20%) percent of the available annual residential development allocations in any fiscal year.
(b) In order to permit phasing of multiunit projects, where such projects exceed the available annual allotment of residential development allocations, the allocation procedure shall include a procedure for the phasing of such projects over more than one fiscal year by reservation of succeeding year allotments. Such reservations shall be deducted from the number of residential development allocations to be awarded for the fiscal year under consideration.
(§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.07. Agricultural land.

In order to maximize public participation in rezoning decisions concerning conversion of agriculturally zoned land to urban uses, to preserve the right of the local electorate to vote on significant zoning matters and to insure that development proposed for agricultural lands is appropriate to its unique character and importance, through June 30, 20271997:
(a) All land within the City which is zoned or designated Agricultural District on the zoning maps of the City as set forth in Chapter 4 of Title 9 of the Pacifica Municipal Code on or after the effective date of the ordinance codified in this chapter may not be rezoned or redesignated, and the "B" district with which the Agricultural District is combined may not be changed, without a vote of the people. (b) The uses to which land zoned or designated Agricultural District can be put and the structures which can be erected thereon are only the uses and structures permitted by the provisions of Chapter 4 of

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Title 9 of the Pacifica Municipal Code on the effective date of the ordinance codified in this chapter, unless otherwise approved by a vote of the people.
(§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.08. Hillside protection.

In order to maximize public participation in rezoning decisions concerning development of sensitive hillside lands, in order to preserve areas of open space where possible and to retain natural terrain by encouraging the concentration of dwellings and other structures on their sites, to help protect people and property from potentially hazardous conditions particular to hillsides, and to insure that development is compatible with the unique hillside resources of Pacifica, through June 30, 20271977:
(a) All land within the City which is zoned or designated Hillside Preservation District on the zoning maps of the City as set forth in Chapter 4 of Title 9 of the Pacifica Municipal Code on or after the effective date of the ordinance codified in this chapter may not be rezoned out of the Hillside Preservation District without a vote of the people.
(b) The standards governing the Hillside Preservation District shall be the standards specified in the provisions of Chapter 4 of Title 9 of the Pacifica Municipal Code on the effective date of the ordinance codified in this chapter, unless otherwise approved by a vote of the people. (§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.09. Relationship to other laws.

Nothing in this chapter shall be construed to exempt any person from compliance with any other applicable City ordinance, regulations, or code which is not in conflict with this chapter. In the event of such a conflict, the provisions of this chapter shall prevail. This chapter may be amended by the City Council. (§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.10. Severability.

If any section, subsection, sentence, clause, phrase or portion of this chapter is for any reason held void, invalid or unconstitutional by a court of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision, and such decision shall not affect the validity of the remaining portions thereof. (§ 1, Ord. 604-C.S., eff. July 8, 1993)
Sec. 9-5.11. Termination.

This chapter shall terminate on June 30, 20272022. On or after June 30, 20252020, this chapter shall be reviewed and revised, if determined to be necessary, to insure consistency with the City's General Plan, including its Housing Element, or with other laws.
(§ 1, Ord. 604-C.S., eff. July 8, 1993, as amended by § 1, Ord. 654-C.S., eff. May 28, 1997, § 1, Ord. 703-C.S., eff.

August 7, 2002 and § 1, Ord. 749-C.S., eff. July 11, 2007, § I, Ord. 789-C.S., eff. May 9, 2012, and § II, Ord. 817-C.S., eff. July 25, 2017)

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Packet Pg. 230 Attachment: Attachment G - Current Growth Management Ordinance with Redlines - PMC Title 9, Chapter 5 (4979 : Introduce Growth

CITY OF PACIFICA

COUNCIL AGENDA SUMMARY REPORT
5/9/2022
1 SUBJECT:

Consideration of an appeal of the Planning Commission's approval of Site Development Permit PSD-811-16, Use Permit UP-76-16, Tentative Subdivision Map SUB-233-16, Sign Permit S129-19, Parking Exception PE-183-19, and Heritage Tree Removal Authorization, and Recommendation for City Council approval of General Plan Amendment GPA-96-19, Rezoning RZ-194-16, Zoning Text Amendment TA-116-19, and Development Agreement DA-4-21, filed by Brendan and Eamon Murphy, for construction of a three-building mixed-use project with 3,165-square feet (sf) of commercial floor area and 19 residential units, and associated condominimum subdivision, at 570 Crespi Drive (APN 022-162-310) and a portion of 540 Crespi Drive (APN 022-162-420). Recommended California Environmental Quality Act (CEQA) Status:

Adoption of a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program in accordance with the California Environmental Quality Act (File No. 2016-004).

RECOMMENDED ACTION:

Open the public hearing, take any public comment, and move to continue the public hearing to a date specific of June 13, 2022.

STAFF CONTACT:

Christian Murdock, AICP, Acting Planning Director
(650) 738-7341
[email protected]
BACKGROUND/DISCUSSION:

The following section provides the relevant background of the project as well as discussion of the appeal and recommendation for a continuance.

A. BACKGROUND
Brendan and Eamon Murphy (“Applicant”) have submitted an application for construction of a 43,696-square foot (sf) mixed-use development including one two-story mixed-use building with three residential units and 3,165 sf of commercial space, two three-story residential buildings behind the street-facing mixed-use building consisting of 16 townhouse residential units; construction of a freestanding sign; merger of two parcels located at 540 and 570 Crespi Drive (APNs 022-162-420 and 022-162-310); removal of three heritage trees; a condominium subdivision; construction of off-site parking, circulation and landscaping improvements at 540 Crespi Drive (the Pacifica Community Center); construction of a wetlands interpretive sign; a development agreement with certain public and developer benefits; a General Plan amendment to revise the “Commercial” land use designation; a zoning text amendment to revise the list of conditional uses in the C-2 (Community Commercial) zoning district; and a rezoning to change the zoning classification to the C-2 zoning district (“Project”).

The proposed General Plan amendment and zoning text amendment would have city-wide applicability and allow residential uses to be established either in the same building as a commercial use above the ground floor or in residential-only buildings on a site that also 11 Packet Pg. 231
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contains a commercial use (horizontal mixed-use) with approval of a use permit. The proposed rezoning would change the project site from the M-1 (Controlled Manufacturing) zoning district to the C-2 (Community Commercial) zoning district.

On March 7, 2022, the Planning Commission adopted Resolution No. 2022-006 by a vote of 6-0 with one abstention to approve Site Development Permit PSD-811-16, Use Permit UP-76-16, Tentative Subdivision Map SUB-233-16, Sign Permit S-129-19, Parking Exception PE-183-19, and Heritage Tree Removal Authorization to approve the Project, and to initiate and recommend City Council approval of Rezoning RZ-194-16, Zoning Text Amendment TA-116-19, and Development Agreement DA-4-21 necessary to enable construction of the Project. The Planning Commission also adopted an Initial Study/Mitigated Negative Declaration (“IS/MND”) and Mitigation Monitoring and Reporting Program (“MMRP”) for the Project to comply with the California Environmental Quality Act (“CEQA”).

B. APPEAL OF PLANNING COMMISSION APPROVAL OF SITE DEVELOPMENT PERMIT PSD-811-16, USE PERMIT UP-76-16, TENTATIVE SUBDIVISION MAP SUB-233-16, SIGN PERMIT S-129-19, PARKING EXCEPTION PE-183-19, AND HERITAGE TREE REMOVAL

AUTHORIZATION AND RECOMMENDATION FOR CITY COUNCIL APPROVAL OF GENERAL PLAN AMENDMENT GPA-96-19, REZONING RZ-194-16, ZONING TEXT AMENDMENT TA-116-19, AND DEVELOPMENT AGREEMENT DA-4-21
On March 17, 2022, Margaret Goodale (hereafter “Appellant”) submitted a City of Pacifica Appeal Form stating several grounds for appeal (“Appeal”), and submitted the applicable fee to the City Clerk’s office, to appeal the Planning Commission’s approval of the Project (Attachment A). The Appellant has stated as grounds for appeal that the approvals violate the City of Pacifica Municipal Code, Housing Element, Below Market Rate (Inclusionary) Program, Heritage Tree Ordinance, the California Environmental Quality Act (“CEQA”) and CEQA Guidelines; that the Project violates the 1980 General Plan; and that the City’s General Plan is fatally flawed and internally inconsistent.

C. APPLICANT’S PROJECT REVISION
Following filing of the Appeal, staff received a revision to the Project plans from the Applicant on April 11, 2022, that would relocate an emergency stormwater overflow inlet and pipe (“Emergency Stormwater Overflow System”) proposed at the southern end of the Project site to a different location near the southwestern corner of the site which would remove the Project from the jurisdictional wetlands. The Emergency Stormwater Overflow System was originally proposed in an area delineated as waters of the United States and/or waters of the State (i.e., jurisdictional wetlands) in the Project plans reviewed and approved by the Planning Commission. Because of potential impacts to these jurisdictional wetlands, the IS/MND prepared by the City included a mitigation measure to reduce the impacts to less than significant levels.

The Project revision submitted by the Applicant would result in all Project components being located outside jurisdictional wetlands based on an updated, focused jurisdictional wetlands delineation (“Updated Wetlands Delineation”) of the southwest corner of the site. Due to the Applicant’s submittal of new information following preparation of the IS/MND and Planning Commission review and approval of the Project, staff engaged the City’s CEQA consultant to prepare a peer review of the Updated Wetlands Delineation. Staff’s review of the Updated Wetlands Delineation and Applicant’s responses thereto are ongoing and will require additional time to complete.
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D. CITY COUNCIL’S ROLE IN THE APPEAL PROCESS
Pursuant to Pacifica Municipal Code (“PMC”) section 9-4.3208, after considering an appeal, the Council may approve, deny or modify the decision of the Planning Commission, or refer the matter back to the Planning Commission for reconsideration. PMC section 9-4.3603 provides that the City Council shall render its decision within 60 days after filing of an appeal. The last regular meeting of the City Council within the 60-day timeframe provided in the PMC to consider the Appeal is the May 9 City Council meeting.

E. CONSIDERATION OF THE APPEAL AND CONTINUANCE
As noted above, review of the Updated Wetlands Delineation is ongoing. Until the review is finished, staff cannot provide an assessment and recommendation on the Project revision for City Council consideration as part of the Appeal. Therefore, staff recommends that the City Council opens the public hearing, allows public comments, and then continues the public hearing until June 13, 2022, when the review is complete.

ALTERNATIVE ACTION:

The City Council may move to continue the appeal hearing to a different date, or refer the Project back to the Planning Commission for reconsideration.

RELATION TO CITY COUNCIL GOALS AND WORK PLAN:

The proposed project is not directly associated with an item on the City Council’s Work Plan. It is the City Council’s normal governance process to hear and determine appeals of Planning Commission actions under the PMC.

FISCAL IMPACT:

No direct impact since all costs would be borne by the project Applicant.

ORIGINATED BY:

Planning Department
ATTACHMENT LIST:

Attachment A - Appeal Form (PDF)
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Attachment: Attachment A - Appeal Form (4983 : Continuance of Hearing of Appeal of Planning Commission approval of 570 Crespi Mixed-use Project)

CITY OF PACIFICA

COUNCIL AGENDA SUMMARY REPORT
5/9/2022
1 SUBJECT:

Introduction of the Fiscal Year 2022-23 Base Budget, Position Recommendations, and FY 2022-27 Capital Improvement Plan.

RECOMMENDED ACTION:

Accept the report, and provide feedback and direction on the proposed FY 2022-23 General Fund Base Budget report, position recommendations, and the FY2022-27 Capital Improvement Plan.

STAFF CONTACT:

Kevin Woodhouse, City Manager
650-738-7409
[email protected]
Yulia Carter, Chief Financial Sustainability Officer
650-738-7301
[email protected]
BACKGROUND:

Each year, the City of Pacifica adopts an annual operating budget that reflects the planned activities for the next fiscal year based on the best information available at the time of adoption.

At mid-year, staff revisits the projections and reports to the Council any changes that are needed to reflect new information and keep the City on track.

The City Council adopted the FY 2021-22 Budget on June 28, 2021, which reflected the second year of the COVID-19 pandemic and included the projected pandemic-induced losses in revenue. On March 14, 2022, staff presented the FY2021-22 Midyear Budget analysis, which showed the Budget on track. During the mid-year budget review, the Council authorized additional adjustments to the FY 2021-22 Budget that included factoring-in salary savings and replenishing some General Fund reserves.

On April 11, 2022, staff presented the Narrative Budget report outlining the Budget planning process, methodology, timeline, and long-term financial forecast and provided the City Manager’s recommended budget strategies. The City's long-term financial forecast continues to project an ongoing structural deficit. Therefore, staff proposed using the modified zero-based budget methodology, a systematic financial management strategy commonly used by local governments to help achieve more cost-effective delivery of public services, which was discussed at length during the meeting.

This report presents the City's FY 2022-23 General Fund Base budget reflecting the current level of services and operations. The base budget is not an exact duplication of the prior year's adopted Budget because of actions that the Council may have taken that modified the Budget over the course of the year and, most notably, because of the FY 2022-23 budget assumptions 12 Packet Pg. 235
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used to develop the base budget further described below.

The goal of a budget process is to develop the City's Budget by completing a full analysis of the City's revenue structure and current service level to identify necessary service increase and/or reduction options, which, when combined, will reach a balanced and sustainable budget.

Staff made a number of revenue and expenditure assumptions in developing the base budget for FY 2022-23. These assumptions were based on known projections and economic conditions and reflected the budget adjustments made by Council during the mid-year budget review. The resulting structural deficit or surplus at the base budget level is critical to discussing departmental or other program funding beyond the baseline to accomplish identified priorities for the upcoming year.

Departmental/program detail and new service-level budget requests will be presented in future budget agenda reports as indicated in the budget timeline table below.

PROPOSED 2022-23 GENERAL FUND BASE BUDGET
Tonight's report presents the Fiscal Year 2022-23 General Fund Base Revenue Budget of $45.4 million and Expense Budget of $43.3 million, leaving a surplus of $2.2 million. However, this $2.2 surplus includes a portion of the 4.6 million allocation of American Rescue Plan Act (ARPA) funding. Without ARPA funding, the Base Budget would project a $2.4 million deficit, primarily resulting from the projected losses of the VLF shortfall as further described below and the general increase in salaries and benefits, including the increase in the PERS unfunded liability. The General Fund Base Budget Revenues and Expenditures Summaries are provided in Attachments 1 and 2. The baseline revenues are built on information previously presented regarding the City's financial status. In coordination with other City departments, Finance developed the FY 2022-23 Base Budget assumptions to include all previously approved items by the City Council and factoring in inflationary conditions.

The General Fund is the City's primary operating fund and is used to account for most day-today activities. It receives unrestricted revenues, and the City's general administrative services, public safety, and community development-related activities such as planning, building, and engineering are budgeted in the General Fund. Revenue sources include but are not limited to property tax, sales tax, transient occupancy tax (TOT), business license registration, and current fees for services.
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Total FY2022-23 Base Budget revenues conservatively increased by $2.3 million, or 5.4%, over the Mid-Year Revised FY2021-22 Budget. Total FY2022-23 Base Budget expenditures increased by $269,973 or 0.6% over the Mid-Year Revised FY2021-22 Budget level. As a reminder, the base budget reflects current levels of service and current projects and does not factor in yet the cost of enhanced services or new projects. Although this report introduces some position-related recommendations and CIP projects, those costs will be presented in the Proposed Budget at a later time.

Below are some key assumptions applied to the FY 2022-23 Base Budget.

FY 2022-23 Base Budget General Fund Revenues Assumptions Revenue estimates have been modified based on the most current information available from department feedback, external sources, and further analysis. The Revenues presented in this report include the American Rescue Plan of 2021 (ARPA) stimulus of $4,610,512. The City was awarded $9.2 million in ARPA funds paid in two tranches. The City received the first tranche of $4,610,511 in the current fiscal year. See the ARPA Funding section of this report below for a full discussion.

The following revenues are projected to reflect significant changes over FY 2021-22:
• Property Tax is the City's largest revenue source. Historically, Pacifica's property tax base has only very slowly expanded. For the FY2021-22 Budget, property taxes comprise approximately 34% of City General Fund revenues. Both secured and unsecured property taxes are levied based on the assessed real property valuation (the basis for property tax levy) as of January 1, 2022. The COVID19 pandemic, while it delayed home and property sales in the 2020 calendar year, did not impact the growth most Bay Area communities experienced due to the transfer of ownership element that has occurred in the current 2021-22 fiscal year. The property tax revenues are projected at $15.2 million or $0.9 million (6.4%) above the FY 2021-22 Revised Budget of $14.3 million based on the information provided by the County and HdL, the City's property tax consultant.
• Charges for Services is the second largest revenue category that includes building, planning, other permits, recreation revenues and rentals, fines, and reimbursements.

The building and planning revenues are projected to decrease since last year’s expected increase has not been realized yet. The building and planning projected revenue is more in line with pre-COVID levels, which is reasonable given the activity projected for FY 2022-23. Overall, this Category shows a decrease of $359,151, or 6.2%. • Intergovernmental is the third largest revenue category, which includes Federal, State, and County governments, including revenue from other governmental agencies, including the ARPA funding of $4.6 million. This Category shows a $1.1 million or 14% decline over the Revised Budget primarily due to miscellaneous grants that will not continue. Also, the annual cost reimbursement from CalOES for Fire wildfire services is not budgeted due to the unpredictable nature of these services but will be recorded in the Category when received.
• Vehicle License Fee (VLF) in Lieu is the fourth largest revenue category. Through the State, there has been insufficient ERAF to fund the VLF in Lieu allocation for the past three years, and there will be insufficient ERAF to fund this next year too. Staff has previously reported to the Council a projected loss (delay ) of this major revenue stream ($2 million for FY 2021-22) currently owed to the City by the State. In the past, the State has backfilled the VLF shortfall, but the State's payment lags two years behind the shortfall year. As of now, the governor's current Budget includes a true-up for 2019-20, 12 Packet Pg. 237
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2020-21, and 2021-22 years, and as a result, there may be a way forward for the full allocation if the Governor's Budget is adopted as presented and signed. The City has received part of the 2019-20 shortfall. The County will allocate the shortfall for FY 2020- 21 ($2.0 million) in FY 2022-23 if the State's Budget does not change. The City's tax consultant (HdL) recommends conservatively budgeting half of the $2 million given the uncertainty of the backfill legislation, which is what staff included in this Base Budget.

Aside from the backfill, the FY 2022-23 returns to a normal level and includes $5.1 million as the full allocation for the year based on the most recent HdL projections. Staff is now working with the County to confirm this budget assumption and may need to modify the Base Budget accordingly once we receive a response from the County. The Governor's May Revised budget will be published in the coming week. The shortfall for FY 2021-22 is reported as $1,192,769, which should be funded by FY 2023-24, although there is a proposal by the State to swap this payment with the returned ERAF that is currently being opposed by all Cities affected by this issue as both VLF backfill and Returned ERAF are due to the local agencies.
• Sales Tax is the City's fifth-largest revenue category. Based on discussions with the City's sales tax advisor and sales tax projections prepared by HdL the local sales activities forecast slightly better performance than initially expected. This is due to an increase in the Restaurants and Hotel category of 5.5%, the Transportation segment increasing 4.6%, and the State / County pool allocation for online sales increasing

4.2%% over the FY 2021-22 projections. Total sales tax is estimated at $3.1 million, a

3.1% increase over the Revised FY2021-22 Budget.
• Other Revenue Categories are broken out this year, including Utility Users Tax (UUT) ($1.9 million), Transient Occupancy Tax ($2.1 million), Cannabis Operations tax ($825k), and Business License Tax ($517k) and other taxes ($1.7 million). The FY 2022-23 base budget was based on the historical averages, new development, and the prior year's returns. The hospitality industry was most affected by the pandemic and the shelter-inplace orders prohibiting leisure travel. HdL has provided updated estimates for the Transient Occupancy Tax to increase by about $400,000 or 24%. This is based on the assumption that the hospitality industry projects full recovery from the pandemic in FY2022-23. Plus, the progress work on bringing the short-term rental properties to tax compliance is also factored in and noting the reopening of the Fairfield Hotel under the new name with additional rooms.
• Operating Transfers In include the administrative expenses charged to the Waste Water Fund. The current year's charge of $862,388 is being increased by the CPI inflation factor of 4.24% resulting in a new administrative expense of $899,000 for FY 2022-23. The onetime catch-up payment included in the current year's Waste Water charge has been removed from the Base Budget resulting in a $120,998 decrease in this Category over the Revised Budget.

FY 2022-23 Base Budget General Fund Expenditures Assumptions Total General Fund Base Budget expenditures are projected at $43.3 million at the Base budget level, only $270,000 or 0.6% higher than the FY2021-22 Revised Budget. Operating Expenses are set consistent with the prior year's actuals and Mid-Year Revised budget adjustments and account for expected inflationary increases.

Attachment 2 demonstrates the General Fund expenditure estimates for FY 2022-23 at the Base Budget level. Below are the key base budget expenditures assumptions:
• Salary and Benefits projections include funding for 173 full-time equivalents (FTE) positions citywide. Funding for part-time positions is consistent with the prior year’s allocation. Overall, salaries and benefits increased by $1.2 million compared to the FY 2021-22 mid-year revised Budget primarily due to removing the $1 million in salary 12 Packet Pg. 238
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savings included in the mid-year Budget. Compared to FY2021-22 Adopted Budget, salaries and benefits are increasing by only $200,000, reflecting year two of the new MOU agreements.
• Vacant positions are budgeted at the top step with the "employee plus one" cafeteria plan assumption for health benefits. Projections also include merit increases for staff members who may be eligible on their performance review dates. • Salaries and Benefits Projections have been funded at 100% and include the recent labor negotiation increases.
• FY 2022-23 PERS retirement rates are budgeted as provided by CalPERS for classic miscellaneous and safety members and Public Employees’ Pension Reform Act (PEPRA) rates for miscellaneous and safety employees without prior municipal experience or who have had a break in service.
• PERS Unfunded Actuarial Accrued Liability (UAAL) payment is budgeted at $5.1 million for Safety and Miscellaneous employees, an increase of approximately $500,000 or 11%.
• An additional contribution to the PARS trust is budgeted at $200,000, consistent with the Council funding strategy #5 approved in April. This FY 2022-23 allocation will provide additional contributions toward the Actuarial Determined Contribution (ADC) in addition to the pay-as-you-go payment strategy that has historically been budgeted in prior years.

This change would allow the City to take advantage of the higher discount rate that will substantially reduce the OPEB unfunded liability in the next actuarial valuation report, resulting in the corresponding reduction of the unfunded liabilities in the City's Annual Comprehensive Financial Report (ACFR).
• Most Professional Services contractual obligations were increased by 2% over the FY 2022-23 Revised Budget to account for regular CPI increases unless the further cost increase was noted and factored into the Budget by operating departments. This Category shows a 1.9% decrease because the current year's Economic Development budget includes a onetime $150,000 ARPA-funded initiative to provide business assistance for economic recovery and small grant programs. • Similarly, most of the Material, Supplies, and Maintenance category-budget line items were increased by 1% over the FY 2021-22 Mid-Year Revised Budget to account for regular inflationary increases. The 7.5% increase over the Revised Budget is primarily due to restoring certain reductions made in the budget amendment adopted on 9/27/2022 to fund new MOU provisions.
• Transfers Out Category accounts for a transfer to the Debt Service Fund to fund Pension Obligation Bonds payment and transfer to General Liability internal service fund to fund Self Insurance Retention (SIR) budget. Overall, this Category projects a net decrease of $2 million compared to the Revised Budget because of the onetime General Fund contribution of $3 million towards the Civic Center budgeted in the current year.

ARPA Funding
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, a part of the American Rescue Plan Act (ARPA), delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. The City was awarded $9.22 million and has already received half that amount in the current fiscal year. As the year unfolded, some of the guidelines and reporting requirements applied to ARPA changed to make it easier for small agencies like Pacifica. According to the Department of Treasury guidelines, the City is a Tier 5 local government, which is considered a Non-Entitlement Unit (NEU) of local government with a population of less than 250,000. As a NEU, the City has different reporting requirements than tier 1 to 4 agencies. Also, since Pacifica's award was less than $10 million, new streamlined reporting requirements were recently published by the Department of Treasury. The new rules allow NEUs to treat up to $10 12 Packet Pg. 239
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million as all "revenue loss," which is one of their reporting categories. For Pacifica, that leaves significant discretion to the City on how best to use the $9.22 million to help Pacifica maintain essential services and recover economically from the pandemic, other than not using it to fund reserves or pre-fund pension liabilities. The City already began to identify certain limited-term positions and other onetime uses of the $9.22 million included in the FY 2021-22 budget.

Additional recommended limited-term positions are discussed further below, and more information on recommended ARPA uses will be presented at the next budget meeting. The Council-approved ARPA uses to date are summarized in Attachment 3 to this report, providing the remaining amount available for allocation.

Position Recommendations for FY2022-23 Budget
Recruitment and retention of public sector employees are currently experiencing a severe wave of challenges, the most difficult in decades. Private-sector competition, a wave of retirements, housing costs, and other cost of living factors in this region, pandemic impacts, and a shortage of qualified applicants have resulted in many failed recruitments for cities in the region, including Pacifica. This problem has been exacerbated for cities like Pacifica, with lower salaries and higher job workload demands due to lower staffing levels than other cities in the region. A 2019 staffing comparison study for the City showed that Pacifica's staffing levels are an average for all departments of 23% lower than comparably sized cities in the area.

While the City organization prides itself on continuing to provide excellent services to the community through its dedicated labor force, efficient use of resources, and innovative program and service-delivery design, over-stretched staffing resources are reaching a crisis point.

Minimal revenue growth year over year, increased expenditures related to just maintaining existing staffing and service levels, and the resulting structural budget deficit does not allow the City the option of adding permanent staff. In these circumstances, human resource and organizational decisions must focus on incentives to retain existing quality employees, reclassification and recruitment strategies, and stop-gap measures such as the use of onetime funding (such as American Rescue Plan Act funding) for the creation of limited-term (nonpermanent) positions.

Such strategies are more important than ever for the upcoming FY2022-23 Budget. Therefore, the City Manager recommends the following modest set of staffing recommendations designed to maintain existing services while containing ongoing salary expenditures as much as possible.

These recommendations are presented here for Council consideration. Following Council direction, the specific financial impacts will be incorporated into the FY2022-23 Proposed Budget for future Council consideration.

Position Reclassifications: It is appropriate to reclassify positions when the City's business needs on a permanent basis require out-of-class work. The following reclassifications are recommended:
• Public Works Associate Engineer to Project Manager: Coastal engineering expertise, grant procurement expertise, Capital Improvement Program development and management, and complex project management such as for the Beach Boulevard Infrastructure Resiliency Project warrant this reclassification from Associate Engineer to a Project Manager classification;
• Ranger to Lead Ranger: The Ranger classification, of which the City has three rangers, requires one position to lead the group and create development opportunities within the 12 Packet Pg. 240
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series. The Ranger team is critical to the City's responsibilities for the beach, parking lot, and coastal trail maintenance and enforcement efforts;
• Child Care Assistant Supervisor to Child Care Supervisor: Currently, the City's child care program has only one Supervisor position, which is focused on the administrative side of the program. Given the increasing complexity of child care, the program warrants an equivalent supervisor position focused on the operational side of the program; • Site Coordinator to Senior Child Care Coordinator: The Site Coordinator series warrants a higher-level classification that adds supportive administrative, project management, and leadership responsibilities to the series and creates development opportunities within the series and succession planning related to the Child Care Supervisor role; Limited-Term Positions: In some instances, it is warranted to use onetime funding for a limited period, such as one to two years, to hire a position for immediate business needs while not creating a permanent financial burden in light of a future projected structural deficit. Currently, due to pandemic impacts and challenges with maintaining existing service levels in numerous departments, onetime American Rescue Plan Act funding can be used to fund limited-term positions. Several were approved for this fiscal year, and the following additional limited-term positions are recommended for the next fiscal year:
• Police Department Records Clerk: The Records Division in the Police Department is responsible for processing all reports, citations, court paperwork, Department of Justice Reporting, crime statistic reporting, new racial identity data reporting in accordance with new state law, submission of cases to the District Attorney, and much more related to report handling, mail processing, phone calls, lobby traffic and more. This division used to have three positions but was reduced to two in 2011 due to budget cuts, yet the workload has increased dramatically in recent years. Comparable cities' Police Departments employ an average of 5 records clerks. With a recently announced retirement, the department will soon be down to one records clerk and risks falling out of compliance with records responsibilities. In addition to recruiting a permanent position to fill the upcoming retirement, the City Manager also recommends a 2-year limited-term and ARPA-funded records clerk to bring the interim staffing level back to three in the division;
• Continuation of Management Analyst for Economic Development and Environmental Sustainability: The City Council previously approved a 1-year limited-term position to support the City's economic development and environmental sustainability efforts. Due to the pandemic, that position was not filled until January 2022. Due to the continuing critical efforts in economic development and environmental sustainability, the City Manager recommends continuing this limited-term position for another year, utilizing ARPA funding;
• Senior Accountant: The City is currently undertaking the design and implementation of a new Enterprise Resource Planning system to modernize its financial and human resources systems. This is a major organization-wide undertaking and requires focused project management expertise to roll out over an 18-month to two-year period. The Finance Division, which is severely understaffed compared to comparably sized cities, does not have the capacity to manage this project. Therefore, the City Manager is recommending a 2-year limited-term and ARPA-funded Senior Accountant level position; In addition to the recommendations above, the City Council had previously approved the addition of several child care teacher positions, the hiring for which was put on hold due to pandemic impacts on the child care program. The program will be looking to ramp back up this year and plans to hire these additional teachers, which are projected to be Budget neutral due to increased child care revenues for being able to enroll more children. 12 Packet Pg. 241
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With the recent departure of the Assistant City Manager/Planning Director, the City Manager continues to evaluate potential reorganization necessary in the City Manager's Office and bring forth any budget impacts related to this reorganization in a future budget session for City Council consideration.

Capital Improvement Program
The capital transfers are not included in this report since the Council has not yet discussed the recommended capital projects, and staff has not yet built in any General Fund transfers towards the CIP program. Once the Council provides feedback on new CIP projects and funding levels, the Finance staff will build the required capital transfers in the Budget. The FY 2022-27 CIP program will be the subject of a future budget discussion with the Council at the next meeting on May 23, 2021. Due to the City’s limited capital funding sources and limited staff capacity to manage major capital projects, it is anticipated that the CIP Program recommendations will be limited to projects previously approved with dedicated funding sources, legally mandated projects, or projects that pose an immediate threat to public health and safety.

Below is a preliminary list of new projects proposed for FY 2022-23. Cost estimates continue to be refined. The Council may wish to provide comments on this list now so that when the full CIP is introduced on May 23rd, the Council’s initial input can be factored in:

1. Community Center Roof Project - $325k - Before installation of the photovoltaic (solar power) occurs, the Community Center roof needs routine maintenance to align the life of the roof with the life of the system being installed. In addition to the cost of materials increasing, the City’s roof consultant specified a more resilient roof that would be more applicable and accommodate the additional weight loads of photovoltaic panels.

2. ADA Transition Plan Update - $100k - This project would continue the update steps for the City's ADA Transition Plan, including an updated inventory of disabled accessibility compliance at City facilities and within the public right-of-way. Disabled accessibility improvement projects are currently undertaken, and will continue in the future, as separate CIP projects, such as the annual curb-ramp projects.

3. FY 2022-23 Pavement Resurfacing Project - $1.5m - The Project will rehabilitate the pavement along roads designated in the 5-year paving plan. This project will also include pavement grinding for base repair as well as installation of thermoplastic traffic striping, markings and pavement markers.

4. Local Roadway Safety Plan - $80k - In order to be eligible for Highway Safety Improvement Program funding, Caltrans has mandated adopted local roadway safety plans. The plan provides a framework for identifying, analyzing, and prioritizing roadway safety improvements on local roads or highway crossings.

5. Storm Drain Master Plan Phase 2 Inspection - $100k - Inspection and preliminary analysis for priority projects identified in the Storm Drain Master plan. This project is to do inspections of the major storm drain trunk lines.

6. Community Center Improvements - $60k - Ongoing maintenance & improvements that are immediately needed include door replacements for security. Future needs include office remodel to accommodate Staff, spalling of the exterior, flooring in the dining room, hallway area, new baseboard, carpet replacement and indoor/outdoor painting of the building.

7. City Facilities WiFi Upgrade - $100k - The City currently has limited and aging wireless access points at its facilities. An investment to add and replace wireless access points to all City facilities is needed. This upgrade will support today's modern workforce, allowing Staff to securely work on their files seamlessly throughout City facilities.

8. Enterprise Backup Solution -$50k - Due to the increasing threats of ransomware and 12 Packet Pg. 242
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other cyber threats, the City needs to upgrade its backup solution to incorporate more robust protection features such as immutable backups to prevent infection of backups.

This includes acquiring new storage hardware to support the software.

9. San Pedro Creek Bank Stabilization Project - $400k - Design and construct creek bank stabilization. The location is upstream from Adobe bridge on City property. Current stabilization is beginning to fail, therefore erosion stabilization work is needed.

10. Oddstad Park Building Maintenance - $200k - The Spindrift building has water intrusion coming in from gaps along the rear and front walls. The damage is flooding throughout the bottom floors, causing sheetrock and carpet damage. Work would mitigate current water intrusion areas, by installing a French drain along the face of the building, improve the existing drainage system, and install a water seal to prevent future water intrusion into the building.

11. Fire Station 71 Building Maint - $150k - Fire Station 71 needs maintenance on the roof, furnace, water heater, duct replacement, and asbestos removal.

12. School Crosswalk Beacon Replacement Project - $40k - In 2014, in-ground roadway lights and flashing signs were installed at five schools. Those systems now have maintenance issues and failures. Standard signs have changed, and thus, replacing those with Rectangular Rapid Flashing Beacons is recommended for this project. One crosswalk will be replaced the first year and five the second year with an additional funding request in the second year.

Wastewater Enterprise Projects

13. Linda Mar Pump Station Jockey Pump Upgrade (Breakout from LM PS Upgrade Project) - $50k - Add a new jockey or smaller pump to the pump station, improving wear and tear on bigger pumps and increasing efficiency and lowering power costs. The project includes one new dry pit submersible pump, suction and discharge piping, valves and appurtenances, and VFD.

14. Linda Mar Pump Station - Bar Screen Rebuild (Breakout from LM PS Upgrade Project) - $150k - Rebuilt existing bar screen that is damaged.

15. Rockaway PS - Bar Screen Rebuild - $150k- Rebuild existing bar screen that is damaged.

16. Sharp Park Pump Station Bar Screen Rebuild - $250k - Rebuild existing bar screen that is damaged. This is a larger bar screen than the Rockaway PS.

17. Smoke Testing Linda Mar & Park Pacific Drainage Basins (Breakout from LM PS Upgrade Project) - $300k - Perform smoke testing for the entire Linda Mar & Park Pacifica drainage basins to confirm issues to identify Inflow and Infiltration sources.

The following continuing Projects will require additional funding in FY 2022-23:

General Capital Projects

1. Beach Boulevard Public Plaza Project - $50k - This project, previously approved by the Council, will replace the existing landscaping within the picnic area along the southern end of the Beach Boulevard Promenade with resilient improvements that will withstand the ocean environment, including plaza area animal play structures. To be flexible and compatible with design and construction of the Beach Boulevard Infrastructure Resiliency Project, only the animal sculpture/play structures will be installed for now. They can be moved and reinstalled later. Additional Budget is needed to complete the installation of the concrete footings for the sculpture/play structures.

2. Urban Forest, Land, and Vegetation Management Plans - $75k - This project, Phase 2 of the Tree Study Program, will hire a consultant to assist in preparing Urban Forest, Land, and Vegetation Plans to address issues related to trees and open space.

Additional funding is needed to increase the current Budget to prepare the Urban Forest Management Plan and conduct public engagement events for the project.

3. Corporation Yard Vehicle Storage Project - $40k - Currently, there is not adequate 12 Packet Pg. 243
Pacifica City Council 10 May 09, 2022
space for vehicles at the corp yard, and there is no storage for vehicles. This project will reorganize the corp yard so that vehicles can be covered from the weather, which will lengthen their useful life. A temporary solution is currently being explored/installed, however additional funding for 22-23 is needed to put in the desired overhang that will be effective.

4. Police Department Radio Infrastructure Improvement - $10k- Pursuant to the Department of Justice requirement, Police Department radio infrastructure equipment needs to be upgraded to the latest security protocols, which involves the replacement of radio infrastructure equipment.

5. Fire Station 72 Emergency Signal Restoration - $80k - The stoplight in front of Fire Station 72 (Linda Mar) is in disrepair. It works intermittently and is outdated. A repair or replacement is needed for public and fire safety.

6. Pier Handrail Repair Project - $200k - The project looks to repair all of the pier railings and a fallen forty-foot section completely rendered unusable on the Pacifica Municipal Pier damaged by high tides and large waves in early 2021. The project is a full replacement of all handrail panels. The additional ask for money is to make up the shortfall that was not able to be grant-funded.

7. Playground Equipment Improvement (formerly Parks & Recreation Projects) - $1.34m - Improvement to outdated citywide parks playground equipment. Equipment will be prioritized per audit. Encompasses Priority Parks Projects: FY 21-22 - Fairmont rec decks, playgrounds at Oddstad, Brighton, Imperial, Skyridge, and Mar Villa. FY 22-23 work - playgrounds @ Edgemar, Saltaire, & Fairway. Additional funding is to cover more park replacements.

8. Parks, Beaches, and Trail Signage Improvements - $5k- Evaluate the Parks and Recreation Sign Inventory document in order to prioritize replacement and/or upgrade of signage at parks, beaches, and trails. Making upgrades to signage at City parks, beaches, and trails will improve the quality, messaging, and communication with facility users. Additional funding is to allow the project to include more signage.

In preparation for the next meeting, staff will identify probable funding sources for projects and explore outside funding sources whenever possible. These will include Federal and State Grants, County contributions, Gas Tax, and various other tax measures. When no external sources of funding can be identified, limited General Fund funding may be proposed to help fund identified projects.

Once the Council provides direction regarding this preliminary list of projects, staff will finalize the funding sources and incorporate final recommendations in the complete five-year CIP program at the next Council meeting on May 23, 2022.

Projected Fund Balance Structure
The FY 2021-22 Operating and Capital Budget was adopted as a balanced budget, meaning that the City's operating expenditures did not exceed general revenues.

At the last City Council budget session meeting, staff reported the long-term financial outlook that showed that the ongoing services to the community will remain in balance during the upcoming fiscal year but will face a projected long-term structural deficit starting with FY 2023-

24. This is in part due to the availability of ARPA funds that offset losses of City revenues during the COVID pandemic. Since these onetime funds will be spent by the end of 2024, the ongoing structural deficit is projected in the future years.

To demonstrate the structural nature of the financial challenges, staff completed the FY 2022-23 Base Budget at the current level of services with and without factoring in the ARPA funds. As shown in the table below, the structural surplus of $2,2 million is projected when the full ARPA 12 Packet Pg. 244
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revenues are taken into account. However, when the ARPA revenues are backed out, the Base Budget shows a structural deficit of $2.4 million.

The structural deficit exists when the ongoing operating expenditures consistently exceed the ongoing operating revenues. This means that the general revenues could no longer support operating expenditures without new revenue sources or applying additional budget strategies or cuts to balance the Budget moving forward (after onetime ARPA funds run out).

Major components of this deficit are due to the severe impact of the COVID-19 pandemic on the City's revenue base, as well as the anticipated loss (delay) of the Vehicle License Fee (VLF) revenues as described earlier and the increased cost of the unfunded pension liability.

Again, the numbers presented in this report only reflect the current Base Budget level of services. It does not consider the implementation of budget strategies and recommendations that staff will be bringing forward at future meetings for more in-depth discussion and the Council's direction on how to reach a balanced and sustainable budget at a desirable level of services.

Budget Deficit - Hypothetical Deficit Balancing Scenario The $2.4 million deficit without ARPA funds is being presented for illustrative purposes only, just to demonstrate the magnitude of the financial challenge of continuing operations at the current service level that is being kept afloat by the use of ARPA funds in the upcoming year but will be more apparent in the future years. Since, by statute, the City will have to adopt a balanced budget, the services would likely have to be reduced or reimagined in order to balance the Budget in the future years unless the City's revenue base is increased.

The table below provides a hypothetical distribution of the $2.4 million deficit between departments based on the current share of the General Fund Budget. To balance the $2.4 million deficit, each department would be required to submit program requests for structural and programmatic service-level cuts to their Budget of approximately 6% to balance the Budget if the City's revenue base remains the same.
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The table is just meant to provide perspective. An across-the-board cut does not take into consideration the City Council or community priorities but can serve as a useful tool to begin the discussion.

It is important to note that these reduction targets show the required economic value that would need to be identified. Although all departments will be required to submit program changes that meet these target cuts, the Council may prioritize some programs and departments over others based on the nature of services and overall impact on the community. Across the board cuts are not a best-practice; rather, the City Manager likely would recommend a strategic approach with careful consideration of each program and service reduction in light of the value and benefit that it brings to the community and the long-term implications on the City's ability to provide highquality municipal services.

Vision 2025 & Beyond - Exploring Revenue Options
At the February 14, 2022 meeting, the City Council received an update from staff on the Vision 2025 & Beyond fiscal sustainability program. This update included a presentation and discussion of potential revenue options the City could consider to cover the $2 to $3 Million per year structural budget deficit that is projected to begin in the 2023-24 fiscal year. (This projection assumes that the upcoming 2022-23 operating budget will be balanced in part by using the second tranche of ARPA funds and the State's repayment of VLF In Lieu funds in the coming fiscal year).

The Council directed staff to explore the possibility of placing a Revenue Measure on the November 2022 ballot, which would be one of three revenue options - Local Sales Tax (.50 cent per dollar) estimated to raise $2.6 Million per year, Utility User Tax (reduce the rate from 6.5% to 5% and broaden the base to include telecommunications and water) estimated to raise $2 Million per year, or Transient Occupancy Tax (an increase from 12% to 15%) estimated to raise $350,000 per year. The City Manager has retained Lew Edwards Group and FM3 Research to poll Pacifica voters to obtain data on these three potential revenue options. Information about polling results will be forthcoming later in May.

Vision 2025 & Beyond - Exploring Revenue Options
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Pacifica City Council 13 May 09, 2022
At the February 14, 2022 meeting, the City Council received an update from staff on the Vision 2025 & Beyond fiscal sustainability program. This update included a presentation and discussion of potential revenue options that the City has to cover the $2 Million to $3 Million per year structural budget deficit that is projected to begin in the 2023-24 fiscal year that starts just over one year from today. (This projection assumes that the upcoming 2022-23 operating budget will be balanced in part by using the second tranche of ARPA funds and the State's repayment of VLF In Lieu funds in the coming fiscal year).

The Council directed staff to explore the possibility of placing a Revenue Measure on the November 2022 ballot, which would be one of three revenue options - Local Sales Tax (.50%) estimated to raise $2.6 Million per year, Utility User Tax (reduce the rate from 6.5% to 5% and broaden the base to include telecommunications and water) estimated to raise $2 Million per year or Transient Occupancy Tax (an increase from 12% to 15%) estimated to raise $350,000 per year. The City has retained Lew Edwards Group and FM3 Research to poll Pacifica voters to obtain their thoughts on these three potential revenue options. Information about polling results will be forthcoming later in May.

OTHER FUNDS
The Base Budget revenue and expenditure for all other funds have also been updated. This includes all of the Special Revenue, Debt Service, Enterprise, and Internal Service Funds. The full budget discussion will include "All Funds," which we typically divide into the General Fund (the majority in terms of dollars and completely discretionary) and Other Funds (largely designated for specific purposes) as well as the Capital Budget (significant projects expected to begin or continue in 2022-23). The Base Budget numbers do not include the CIP budget allocations that will be added for the next meeting as mentioned above.

Staff used the same basic assumptions for all other funds to factor in 2% cost of living increase for the contract and professional services categories and 1.5% for materials and supply.

Enterprise Funds consist of Sewer/Wastewater and Beach Parking funds. Enterprise funds are used for services that are financed and operated as a private business enterprise. The FY 2022- 23 total enterprise funds base budget is $27.1, which is 30% of the City's overall budget. Sewer funds are used to account for sewage collection, treatment, major replacements, and maintenance and protection improvements to the sewer system. Sewer charges of $18.6 million are based on a 3.5% rate increase in FY 2022-23. The sewer operating expenditures include the same inflationary base budget assumptions. The Salaries and Benefit costs of approximately $5.4 million are based on 14 FTE allocated to the Sewer Fund and include all current MOU provisions. Beach Parking Fund is used to account for parking services to residents and visitors. The revenues are projected at $18.6 million, which is in-line with the FY 2021-22 Revised Budget.

Special Revenue and Capital Funds are used to account for specific revenue sources or financial resources for which expenditures are restricted by law or administrative action to specific purposes. This Category includes Gas Tax and Streets Funds, General Capital, Drainage, Housing in-lieu, Parking in-Lieu, Park in-Lieu, PB&R Special Revenue and Roy Davies Trust, Disaster Accounting, and other funds. The FY 2022-23 expenditures of $13.5 million for this Category represent around 15% of the City's total Budget.

Internal Service Funds serve the needs of the City and are used to account for Citywide services on a cost-reimbursement basis. These funds accommodate the motor pool, employee benefits, and risk management needs of the City and are supported by the funds that receive 12 Packet Pg. 247
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benefits, including the General Fund. The FY 2022-23 budget for this Category is $3.3 million, which is 4% of the City's Budget.

Debt Service Fund is used to account for long-term debt obligations. The FY 2022-23 budget for the debt service category is based on the updated debt service schedule. The changes include a change in accounting for the General Fund repayment for the Wastewater Enterprise loan payment of $0.4 million that is now being recorded as part of the annual debt service and not year-end adjustment as it was done in the past.

NEXT STEPS
At the next meeting on May 23, 2022, staff will be presenting a five-year CIP program and Master Fee schedule. In parallel, all departments are currently working on their budget recommendation for service changes that will be submitted to the City Manager in order of department priorities. Over the next few weeks, the City Manager will meet with each department to review and discuss their requests and ultimately formulate a plan for the balanced FY 2022-23 budget. FY 2022-23 Budget recommendations will be based on many factors, including the Council's strategic vision and service-level impact on the overall City operations and services provided to the community.

FISCAL IMPACT:

There is no action associated with this item; this is an informational presentation only with Council comments being sought to help guide preparation of the Proposed Budget for future Council consideration. As reflected in the budget calendar above, staff will be bringing forward specific strategies to balance the FY 2022-23 Budget at future meetings.

ORIGINATED BY:

City Manager's Office
ATTACHMENT LIST:

Attachment 1 - General Fund Baseline Budget Revenues Summary (PDF) Attachment 2 - General Fund Baseline Budget Expenditures Summary (PDF) Attachment 3 – Updated ARPA Allocation (PDF)
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Attachment 1
Description FY 2020-21
Actual
FY 2021-22
Adopted Budget
(amended as
9/27/2021)
FY 2021-22
Mid-Yr.

Revised
Budget
FY 2022-23
Proposed Base
Budget
%
FY 2022-
23 Budget
$ Change
Base over
Revised
% Change
Base over
Revised
Taxes $ 27,255,209 $ 26,501,531 $ 27,519,081 $ 31,433,700 72% $ 3,914,619 109.4% Property Tax $ 15,131,117 $ 14,273,769 $ 14,273,769 15,181,300 35% $ 907,531 6.4% Vehicle License Fees $ 2,643,981 $ 2,658,130 $ 3,688,130 6,106,200 14% $ 2,418,070 65.6% Business License Tax $ 444,171 $ 492,750 $ 492,750 516,600 1% $ 23,850 4.8% Cannabis Tax $ 775,261 $ 910,295 $ 795,595 825,000 2% $ 29,405 3.7% Sales Tax $ 2,848,681 $ 2,860,153 $ 3,017,753 3,111,200 7% $ 93,447 3.1% Transient Occupancy Tax $ 1,531,550 $ 1,750,423 $ 1,695,073 2,100,000 5% $ 404,927 23.9% Utility Users Tax $ 2,146,229 $ 1,868,218 $ 1,868,218 1,905,600 4% $ 37,382 2.0% Other Taxes $ 1,734,220 $ 1,687,793 $ 1,687,793 1,687,800 4% $ 7 - Intergovernmental $ 2,633,423 $ 6,128,312 $ 7,558,612 6,469,212 15% $ (1,089,400) -14% Other Revenue $ 737,600 $ 88,000 $ 88,000 88,000 0% $ - - Charges for Services $ 4,317,983 $ 5,967,323 $ 5,776,651 5,417,500 12% $ (359,151) -6% Sub-total $ 34,944,216 $ 38,685,166 $ 40,942,344 $ 43,408,412 100% $ 2,466,068 6% Transfers In $ 1,476,707 $ 2,150,898 $ 2,150,898 2,029,900 $ (120,998) - Total $ 36,420,923 $ 40,836,064 $ 43,093,242 $ 45,438,312 $ 2,345,070 5.5% City of Pacifica
General Fund Revenue Detail
FY2022-23 Proposed Base Budget

12.a
Packet Pg. 249 Attachment: Attachment 1 - General Fund Baseline Budget Revenues Summary (4984 : FY 2022-23 Base Attachment 2
Expenditure By Category FY 2020-21
Actual
FY 2021-22
Adopted Budget
(amended as
9/27/2021)
%
FY 2021-
22 Budget
FY 2021-22
Mid-Yr.

Revised
Budget
FY 2022-23
Proposed Base
Budget
%
FY 2022-
23 Budget
$ Change
Base over
Revised
% Change
Base over
Revised
Salaries & Benefits $ 25,098,441 $ 28,138,921 66% 28,705,984 29,890,845 69% 1,184,861 4.1% Contract Services $ 5,982,005 $ 6,893,746 16% 7,828,046 7,676,425 18% (151,621) -1.9% Material/Supplies/Maintenance $ 3,264,977 $ 3,134,698 7% 3,248,698 3,492,831 8% 244,133 7.5% Salary Savings $ - $ - 0% (1,000,000) - 0% 1,000,000 -100.0% Sub-Total 34,345,424 38,167,365 90% 38,782,728 41,060,101 95% 2,277,373 5.9% Transfers/Allocations Out $ 1,861,270 $ 4,219,481 10% 4,219,481 2,212,081 5% (2,007,400) -47.6% Total 36,206,694 42,386,846 100% 43,002,209 43,272,182 100% 269,973 0.6% Expenditure By Deparment FY 2020-21
Actual
FY 2021-22
Adopted Budget
(amended as
9/27/2021)
%
FY 2021-
22 Budget
FY 2021-22
Mid-Yr.

Revised
Budget
FY 2022-23
Proposed Base
Budget
%
FY 2022-
23 Budget
$ Change
Base over
Revised
% Change
Base over
Revised
General Government $ 5,024,509 $ 6,038,551 14% 5,469,351 5,990,783 14% 521,432 10% Police Department $ 10,114,604 $ 10,610,560 25% 10,792,423 11,369,610 26% 577,187 5% Fire Department $ 6,983,578 $ 7,101,477 17% 7,541,377 7,894,661 18% 353,284 5% Planning & Building $ 2,409,539 $ 3,832,577 9% 4,045,777 4,144,092 10% 98,315 2% Public Works $ 4,313,018 $ 4,682,068 11% 4,825,068 5,080,362 12% 255,294 5% Parks, Beaches & Recreation $ 4,384,857 $ 4,862,045 11% 5,068,645 5,323,793 12% 255,148 5% Non-Departmental $ 2,976,590 $ 5,259,568 12% 5,259,568 3,468,881 8% (1,790,687) -34% Total $ 36,206,694 $ 42,386,846 100% $ 43,002,209 $ 43,272,182 100% $ 269,973 1% General Fund Expenditures
City of Pacifica
FY2022-23 Proposed Base Budget

12.b
Packet Pg. 250 Attachment: Attachment 2 - General Fund Baseline Budget Expenditures Summary (4984 : FY 2022-23 Attachment 3
Fund FY 2021-
22 Uses
FY 2022-
23 Uses Total
ARPA Award $4,610,511 $4,610,512 $9,221,023
Rev. Losses
Provide government services to the extent of a reduction in the recipient’s general revenue, as calculated according to ARPA regulations.** General $2,535,594 $2,639,553 $6,941,873 Economic initiatives focused on business assistance/retention and strategic economic recovery planning, including City contribution to existing small business grant programs. General $150,000 $150,000 Tourism Marketing Program (1st year of 2-year allocation) General $50,000 $75,000 $125,000 Community Conversations Regarding Homelessness General $0 $0 Assistance to unhoused individuals such as dumping station or contribution to safe parking program for vehicularly housed individuals . General $150,000 $150,000 City Facility COVID Prevention - Sanitation & PPE General $120,000 $120,000 Two-Year Limited Term Planner (assist with housing and business application/policy update backlog)* General $168,660 $172,000 $340,660
Hero's Fund General $40,000 $40,000
ARPA Administration and infrastructure enhancements to support report access, business licensing, payments, and other contemporary systems. General $50,000 $50,000 Two-year limited term City Clerk & HR Assistance* General $106,009 $108,000 $214,009 Two-Year Limited Term Public Works Project Manager* General $145,976 $148,000 $293,976 City Facility Ventilation System Improvement/Replacement* Gen. Capital $155,000 $155,000 City Facility Ventilation System Improvement/Replacement* Gen. Capital $225,000 $225,000 ARPA One-time 1% Premium Pay per new MOU agreements General Fund $113,242 $119,783 $233,025 ARPA One-time 1% Premium Pay per new MOU agreements WW Fund $24,794 $26,685 $51,480 Full-time Community Services Officer position in the Police Department for unhoused liaison services and Oversized Vehicle Ordinance enforcement. Gen. Fund $131,000 $131,000 General Fund Exp $1,093,887 $753,783 $1,847,670
General Capital Fund Exp $380,000 $0 $380,000
Wastewater Fund Exp $24,794 $26,685 $51,480
$576,236 $1,190,490 $0
*Limited-term positions are factored in the proposed budget assuming 25% vacancy rate. ** The total ARPA funding award is $9,221,023. The Department of Treasury guidelines initally limited the the Revenue Loss category to the statutory calculation. Now, 100% of the funding qualifies under the Lost Revenue category. The second row reflects the Lost Revenue category per the original Treasury guidlines. The remaining ARPA funding available for allocation is located on the last row.

ARPA Allocation
Expenditures
Total Available
City of Pacifica
ARPA Allocation
Approved by City Council Year-to-Date
5/9/2022

12.c
Packet Pg. 251 Attachment: Attachment 3 – Updated ARPA Allocation (4984 : FY 2022-23 Base Budget, Position Recommendations and CIP)