CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
11/10/2025
1 SUBJECT:
Council Study Session – Revenue Generation Opportunities and Pacifica’s Financial Sustainability Challenges
RECOMMENDED ACTION:
Hold a Council Study Session on Pacifica’s financial sustainability challenges and revenue generation opportunities. Provide direction to the City Manager on Options to address these challenges to maintain the Current Level of City Services and address Unfunded Capital Project and Other Operating Needs.
STAFF CONTACT:
Kevin Woodhouse, City Manager
(650) 738-7409
[email protected] <mailto:[email protected]> Yulia Carter, Assistant City Manager
(650) 738- 7402
[email protected] <mailto:[email protected]>
FORWARD:
Each year the City must adopt a balanced budget for the upcoming fiscal year. And each year this is a challenging process involving compromises while striving to maintain essential service levels. Despite significant historical and on-going budget challenges, Pacifica has been able to balance the budget each year, while achieving award-winning budget and financial audit reports, a testament to transparency, accountability and prudence of the City’s financial planning and management practices.
However, over years of expenditure containment, slow revenue growth, and increasing state and federal funding restrictions, the feasibility of year-by-year budget balancing while maintaining essential service levels is disappearing. Low staffing and compensation levels in comparison to the labor market norm for local government in this region is a serious threat to organizational sustainability. And lack of funding for critical infrastructure improvement projects is a growing threat to public health and safety.
As part of this year’s staff workplan to support the City’s Strategic Plan, the City Manager committed to preparing for a study session in the fall of Fiscal Year 2025-26 about Pacifica’s continuing financial sustainability challenges for the City Council and the community to gain a deeper understanding about Pacifica’s financial realities and options moving forward. The City Manager’s Fiscal Year 2025-26 Budget Transmittal Memo emphasized that the path forward must entail reasonable new development of housing and mixed-use centers to realize property and sales tax revenue increases, hotel capacity to realize transient occupancy tax revenue increases, combined with other revenue generation strategies such as strategic economic development and voter-approved revenue measures if Pacifica is to ever achieve, and operationally sustain, the level of service delivery desired by the community. The purpose of this study session is to explain and document the numbers behind this reality. Only by understanding today’s financing baseline can the Council, and the community, begin an honest conversation about the difficult financial and service-delivery choices Pacifica must make about its future.
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The City Council’s Strategic Plan acknowledges this reality by identifying organizational and fiscal stability as its top-priority goal. The Strategic Plan also sets a vision for Pacifica’s future that can only be achieved with a well-staffed, strong, and stable workforce and hundreds of millions of dollars in capital project funding. It is not only my obligation as City Manager, but my deepest hope for Pacifica, that this study session helps to further City Council and community understanding about how to connect the dots between current financial reality and future vision, to show and explain “why,” and not just “how,” Pacifica’s revenues are lagging so far behind what’s possible for a community like Pacifica, and therefore to shed light on a multi-pronged revenue enhancement strategy that can help bring the City Council’s vision to reality.
This thorough staff report provides a great deal of information, organized in four sections as follows:
• Section 1 - Budget Challenges: Reviews the City’s projected General Fund deficit, staffing limitations, and unfunded capital needs.
• Section 2 - Lessons from Thriving San Mateo County Communities: Provides examples of how some neighboring cities achieved long-term fiscal sustainability and economic vitality through strategic housing growth, targeted economic development, and diversified revenue streams.
• Section 3 - Pathways Toward Fiscal Sustainability: Explores potential strategies to strengthen the City’s long-term financial base, including revenue enhancements, costrecovery, development-related funding, and other tools. • Section 4 - Next Steps: Evaluates potential voter-approved measures to address the City’s immediate budget deficit to support the continued delivery of essential services.
The staff presentation on November 10, 2025, will augment this information with other visuals to help convey several key points.
The overarching focus for this study session is to establish a shared fiscal baseline understanding about local government revenue generation and where structural gaps exist, and what strategies may exist to bridge those gaps, so Pacifica can strengthen its fiscal base through sustainable and diversified revenue sources. The scope of this discussion is not intended to dive in depth into City expenditures or specific service levels or specific economic development tasks or projects. Those types of detailed topics are part of the annual budget and Capital Improvement Program development process and other specific agendized discussions for City Council which require much more detailed staff preparation and analysis.
INTRODUCTION:
The City of Pacifica faces a fiscal landscape that is increasingly complex and multidimensional.
For many years, the City has managed to balance its annual budgets primarily by reducing expenditures and deferring investments, which meant living within existing revenues but at the cost of long-term organizational and community health. This has meant cutting positions and underfunding salary growth to the point where the organization’s capacity for service provision became inadequate to meet the needs and desires of the community.
This approach has left multiple layers of structural imbalance. The first and most visible is the operating deficit projected to emerge beginning in FY 2026-27. Beneath that, however, lies a chronically underfunded organization, with staffing levels, salaries, and benefits that have not kept pace with the demands of modern service delivery or regional labor market realities. This has constrained the City’s capacity to recruit, retain, and sustain the professional workforce needed to provide high-quality services.
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A third and equally critical layer involves the City’s infrastructure and capital investment deficit.
Decades of deferred maintenance have accumulated across streets, facilities, and public spaces, compounded by Pacifica’s extreme coastal climate, which accelerates wear on assets and increases long-term maintenance costs. The City’s unfunded capital projects now represent hundreds of millions in deferred public investment, and there is currently no dedicated or sustainable source of funding to maintain, let alone modernize, the infrastructure that sustains Pacifica’s quality of life and resilience.
Together, these interrelated challenges, operating shortfalls, under-resourced staffing, and unfunded capital needs, form a complex fiscal problem that cannot be addressed through incremental measures alone. The solution must be equally comprehensive and thoughtful, combining near-term stabilization with longer-term strategies for fiscal sustainability, economic growth, and organizational capacity building.
During the preparation of the 2025-26 fiscal year City Budget, Staff reviewed and updated estimates for revenues and expenditures over the next 10 years. The budget process also looked at challenges the City faces in the areas of insufficient staffing levels, lack of competitive pay and benefits, and backlog of unfunded Capital Project needs.
These challenges were highlighted in the adopted City Budget, and the City Manager noted the plans to bring a review of these items and potential options to the City Council in the Fall.
Accordingly, the purpose of tonight’s Study Session is to take a deeper and more strategic look at Pacifica’s long-term fiscal outlook. This report presents refinements to the updated 10-Year Financial Forecast to illustrate the magnitude and structure of the City’s fiscal sustainability challenges, and to discuss a range of potential revenue-generating initiatives, and funding strategies. These include both voter-approved revenue measures and non-tax options, including cost recovery and audits, economic development, housing and mixed-use development, and grants.
The goal is not only to close a projected budget gap, but to position Pacifica to thrive: to maintain core services, invest in infrastructure, and support an organization capable of meeting the expectations of its residents. The City Council’s discussion tonight will help define that shared vision for fiscal sustainability and guide the next steps, including which potential revenue measures should advance to further feasibility analysis and community engagement.
Given the size of the City’s projected financial shortfall starting in 2026-27 to maintain the current level of City Services, staff has not yet explored the added cost of restoring City Services that were cut in prior years or enhancing the current level of City services.
To achieve long-term structural sustainability at the level of service delivery and infrastructure investment envisioned by the community, Pacifica must look beyond short-term budget balancing and toward a more intentional and forward-looking fiscal strategy. This will require the City Council and the community to thoughtfully consider voter-approved revenue measures, expanded cost-recovery tools, new and re-development, and other innovative opportunities to ensure that essential public services, facilities, and capital assets can be maintained and strengthened over time.
BACKGROUND
SECTION 1: BUDGET CHALLENGES
A) GENERAL FUND BUDGET DEFICIT IN FUTURE YEARS ($3 Million to $6.6 Million/year)
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The City’s General Fund budget includes most of the day-to-day services the City provides. This includes Police, Fire, Community Development, Parks, Beaches & Recreation, Public Works, Finance and Administration. In 2024-25, the General Fund budget was balanced with a projected one-time surplus of $1.15 million, due to a one-time debt service payment relief from the Debt Service Fund. Current estimates show that surplus being reduced to $0.5 million, however this is an unaudited estimate, as the year is not finalized.
This fiscal year (2025-26), the Adopted General Fund Budget projected to end the year with a $42,109 positive balance. However, within the same week of the budget adoption, staff learned that the State decided to only fund 2/3 of the Vehicle License Fee In-lieu backfill payment owed to the City in FY 2025-26, which resulted in an immediate $0.7 million revenue reduction in the current year. Because the budget was adopted on the expectation of full payment of this backfill, we now face a budget deficit. However, Budget Strategy #2, approved by Council, allows for filling this gap in the current year with General Fund reserves, preserving planned service levels for the current fiscal year. This unexpected withholding exposes local governments, including Pacifica, to State fiscal risk shifting. As the County’s lawsuit argues, this breach threatens core services if not reversed. Further corrective action will absolutely be necessary and discussed during the next budget cycle if the State does not restore the missing 1/3 payment.
In future years (2026-27 through 2034-35) the General Fund is projected to have an annual deficit that ranges from $3 Million to $6.6 Million as shown in the table and charts shown below:
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Another issue raised by the Long-Term Financial Projection is the level of the City’s Unassigned General Fund Balance. The Government Finance Officers Association (GFOA) recommends that the minimum balance should equate to two months of General Fund expenditures, which is $8.8 million or 16.7% of the current budget.
This standard was met for the current 2025-26 fiscal year at adoption. If the structural budget deficit remained unaddressed in subsequent years, the unassigned General Fund reserves would continue to shrink and eventually the level of this balance would fall significantly below the recommended level as shown in the chart below and in Attachment A, which provides the detailed assumptions for the 10-Year financial model.
While the City does maintain a 10% reserve in the General Fund over this 10-year period in the model, it would be desirable to increase revenues so that the GFOA Unassigned General Fund Balance is also maintained. If the structural deficit remains unaddressed, the forecast shows that the City’s reserves could fall below the GFOA-recommended two months of operating expenditure reserves as early as FY2026-27, with full depletion of reserves projected by Pacifica City Council 6
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FY2028-29.
Maintaining sufficient reserves is necessary for fiscal and operational sustainability, which becomes especially critical in uncertain economic conditions. Therefore, staff always strives to go above the minimum recommendation for the General Fund undesignated fund balance. The prospect of it falling below the minimum threshold guidelines presents a significant challenge to maintaining the City’s operations and is not sustainable, which means significant cuts would likely be needed to balance the budget in future years.
B) GENERAL FUND REVENUES & STAFFING
In June 2024, the City completed a citywide staffing analysis conducted by Raftelis, a consulting firm specializing in local government fiscal and organizational studies (Attachment B). The study compared Pacifica to eight peer cities in Northern California based on population, services, and General Fund size.
At the time of the study, Pacifica employed 187.3 full-time equivalent (FTE) positions-placing it 17% below the peer average of 6.0 FTE per 1,000 residents, with 5.0 FTE per 1,000 residents.
Peer cities ranged from 151 FTE in Martinez to 285.5 FTE in Menlo Park, with General Fund revenues between $41.5 million (Martinez) and $76.1 million (Menlo Park). Pacifica’s General Fund revenue of $48.6 million was the second lowest in the group, exceeding only Martinez.
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Since the Raftelis study, Pacifica has worked diligently to strengthen its organizational capacity despite ongoing fiscal constraints, increasing total staffing to 201.75 FTE. This progress improved the City’s position from 17% below to 13.3% below the peer average.
To reach a staffing level comparable to the peer group, Pacifica would still require approximately 25 additional FTEs, representing a conservative estimate of about $3.8 million in ongoing General Fund costs (assuming an average fully burdened annual cost of $150,000 per position).
When comparing specifically to San Mateo County peers, Pacifica continues to operate well below regional benchmarks:
• 41% below Menlo Park
• 32.5% below Burlingame
• 23.5% below San Bruno
• 5.5% below Foster City
When interpreting these comparisons, it is important to recognize that staffing analyses are not direct one-to-one evaluations. Each city organizes its departments differently, contracts for various services, and operates under distinct service levels, community expectations, and geoeconomic conditions. For example, some peer cities manage utilities, recreation, or library services internally, while others rely on special districts or third-party providers.
Pacifica’s updated figures reflect only total FTE counts, not a detailed assessment of functional Pacifica City Council 8
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responsibilities or service delivery models. A more comprehensive organizational analysis, including examining the scope of services, departmental structure, and workload factors, would be necessary to fully analyze staffing comparisons across jurisdictions.
However, the data clearly demonstrate that Pacifica continues to provide a broad range of municipal services with fewer staff and lower revenues than its peers. As the City works to meet community expectations and maintain service quality, increasing organizational capacity, through both staffing and revenue growth, will be essential to long-term fiscal and organizational sustainability.
The City Council has made important progress over the past two rounds of labor negotiations by adopting a citywide framework to gradually bring employees to market, improving competitiveness in several classifications. However, significant gaps remain. It is difficult to estimate what it would take to bring all positions to market, as the labor market is fluid and better-resourced jurisdictions in our region drive regional salary benchmarks upward through their own negotiation practices. However, based on the current data, staff estimates approximately $4-5 million annually in additional General Fund resources would be needed to bring city job classifications to market.
C) CAPITAL IMPROVEMENT PROJECTS & UNFUNDED PROJECTS
Capital Improvement Program
The Capital Improvement Program (CIP) is the portion of the City Budget that identifies projects, assigns costs, and recommends schedules for design and construction of capital improvements over a five (5) year horizon. These are major projects that are outside the scope of the day-today City operations found in the City's Operating Budget, which are funded by special funds and the General Fund.
Capital improvements are projects that involve the purchase, improvement, or construction of major fixed assets and equipment, which are typically large in size, expensive, non-recurring and permanent. The Capital Improvement Program (CIP) consists of projects to maintain and enhance the City’s infrastructure of roadways, sidewalks, utilities, structures, and facilities for the benefit of the community.
The City’s capital improvement needs are a result of an aging infrastructure, significant deferred maintenance, and desired construction on new and existing facilities. The CIP identifies programs and projects needed to satisfy the City Council’s strategic goals and objectives to address the long-term obligations and investments in public infrastructure and the future needs of the community.
These projects are funded by sources including Gas Tax, Measure A and SB 1 (streets, sidewalks, and traffic improvements), Measure W, NPDES, Roy Davies Fund, Parks Beaches & Recreation Special Revenue, Disaster Accounting Fund, Wastewater Taxes and Fees (sewer system improvements and projects), and Grants and Insurance funds. When specialized funds, like Gas Tax and Wastewater fees cannot fully cover the cost of Capital Projects, the City transfers funds from the General Fund, if available, into the General Capital Improvement Fund to complete projects. This, however, is an on-going challenge given the City’s ongoing structural operating deficit, which limits the availability of General Fund resources for capital investment.
While no city has sufficient funding to meet the full breadth of its infrastructure needs, Pacifica faces particularly elevated capital pressures, driven by its coastal geography, exposure to erosion and sea level rise, and accelerated wear on facilities and utilities. In short, the baseline Pacifica City Council 9
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maintenance burden for Pacifica is higher than for many inland municipalities.
Unfunded Projects ($371.4 Million)
The annual review of the City's Capital Improvement Program focuses on projects that can be funded and constructed over the next five years. This section reviews the priority capital projects that are either partially or completely unfunded at this time.
With the assistance of the Public Works department, a list of these unfunded projects was compiled. There are 38 projects requiring $371.4 Million to complete. Seven of these projects each require $10 Million or more, with the largest project to address needed Street Improvements in Pacifica that totals $95 Million. This level of investment is urgently needed as Pacifica’s Pavement Condition Index (PCI) averages approximately 47, placing it among the lowest in the Bay Area and well below the statewide average of about 65 (although the PCI has improved in recent years due to the City’s strategic approach to its streets maintenance program). This reflects years of deferred maintenance and limited rehabilitation funding. Many of Pacifica’s streets are now rated in the “poor” or “very poor” range, requiring full reconstruction rather than resurfacing.
The $95 million estimate represents the cost to restore the roadway network to a state of good repair and prevent further deterioration that would otherwise increase long-term maintenance costs. Each year of deferred investment is estimated to increase project costs by 8-10% due to inflation and accelerated pavement degradation, restating the urgency for roadway rehabilitation.
A breakdown of the other unfunded projects category can be found in Attachment C.
Fleet and vehicle replacement costs are not included in the unfunded projects total. During the FY 2025-26 budget proceedings, fleet replacement requests totaled $1.2 million, which went unfunded in the current year. The total fleet replacement needs over the next five years are projected to reach $7 million.
The magnitude of unfunded capital projects highlights a structural challenge: Pacifica’s CIP needs far exceed available revenue sources, and the City’s structural operating deficit limits the Pacifica City Council 10 November 10, 2025
ability to allocate any General Fund dollars for capital needs. Without additional long-term funding strategies, deferred maintenance will continue to grow, increasing future costs and service impacts.
City Staff in Public Works, Finance and the City Manager's Office will continue to review these projects and look for grants, outside funding sources (Federal, State, Regional, County) to bring these projects forward. In Section 2 of this report, we will also discuss the option of a General Obligations Bond (G.O. Bond), which could be brought forward to the voters at a future General Election to cover the cost of some or all of these projects.
SECTION 2: REVENUES IN THRIVING SAN MATEO COUNTY COMMUNITIES Before exploring potential solutions such as new revenue measures or fiscal strategies for Pacifica’s future, it is helpful to take a look at what a thriving community looks like in practice. To do that, we can look at a few of Pacifica’s neighboring cities, like Burlingame, Menlo Park, and San Carlos, each of which has evolved over the past 10-15 years into a model of balanced economic growth, fiscal resilience, and community vitality.
While each city followed its own path and selected strategies tailored to its unique challenges and opportunities, they share common traits: steady growth in assessed property value, rising General Fund revenue per capita, and successful integration of housing, infrastructure, and economic investment. By understanding how these communities achieved long-term stability and vibrancy, Pacifica can draw lessons that inform its own fiscal sustainability strategy and future planning decisions.
The data below illustrates the fiscal trajectories that have emerged across San Mateo County over the past 15 years. While all four cities have grown, Pacifica’s General Fund revenue per capita and assessed-value growth have lagged behind its peers.
Pacifica’s General Fund revenue per capita roughly doubled (+102%), compared with increases as high as +127% (Burlingame). Similarly, Pacifica’s assessed property value grew by 95%, while Burlingame, San Carlos and Menlo Park, experienced gains of 157%, 162% and 193%, respectively.
City General Fund Revenue
Per Capita
Change (%) Secured Assessed Value
(AV)
Change
(%)
Pacifica $618 → $1,207 +95 % $4.36 B → $8.48 B +95 %
Menlo Park $1,073 → $2,197 +105 % $9.38 B → $27.46 B +193 % San Carlos $894 → $1,929 +116 % $6.48 B → $17.00 B +162 % Burlingame $1,252 → $2,838 +127 % $6.66 B → $17.13 B +157 % The growth in assessed property value among peer cities reflects the combined effects of housing production, commercial reinvestment, and population growth over the past 15 years.
According to the California Department of Finance (DOF) Housing Unit Estimates (2009-2025), Burlingame, Menlo Park, and San Carlos all experienced stronger population growth of approximately 4-5%, supported by housing and employment expansion, while Pacifica was the only city among the four where population declined (by 4.4%) over the same period.
Between 2010 and 2025:
Burlingame added approximately 976 housing units (+7%), Menlo Park added 1,190 units (+9%),
San Carlos added 390 units (+3%), while
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Pacifica added only 334 units (+2%).
These housing units contributed directly to growth in assessed property value, expanding each city’s tax base and stimulating secondary economic activity through construction and local spending. At the same time, all three peer cities achieved substantial commercial and mixeduse development, which accelerated their fiscal growth even more. ➢ Menlo Park leveraged major office and research campus redevelopment in the Bayfront area, anchored by tech and life-science employers. This expanded assessed property values and diversified the City’s economic base and increased daytime activity and visitor spending.
➢ Burlingame expanded its hospitality, retail, and life science sectors near the airport corridor, attracting research facilities, and also increasing TOT from business travel and conferences.
➢ San Carlos transformed its eastern industrial corridor into an Innovation Zone, attracting life-science and advanced-manufacturing companies along Industrial Road. By converting older, lower-value parcels into modern industrial and research facilities, the city significantly increased taxable property values and generated new business activity, including jobs, business travel, and supporting services.
These projects significantly raised commercial property assessments and broadened the local tax base. Cities that experienced steady residential and commercial growth also realized substantially higher assessed-value growth: +157% in Burlingame, +162% in San Carlos, and +193% in Menlo Park, as well as generated secondary fiscal benefits through higher sales tax, and TOT revenues.
By contrast, Pacifica’s property-value growth has been driven almost entirely by residential appreciation, with only 2% new housing units added over the last 15 years and practically no new commercial development. This helps explain why Pacifica’s assessed-value growth (+95%) has lagged behind nearby cities that have diversified development and reinvested in their local economies.
All these land-use strategies boosted local employment, increased commercial assessments, and generated stronger sales-tax performance. From FY 2010-11 to FY 2024-25, Burlingame’s sales-tax base grew by 52.8% or $3.9 million, driven by restaurants, hotels, and transportation, building and construction, and business industries. During the same period, San Carlos achieved a 70% or $4.2 million increase in total sales-tax revenue, primarily due to the Innovation Zone, Restaurants and Hotels and building and construction sectors. Pacifica’s sales-tax revenue grew by 42% or $0.7 million, reflecting steady consumer activity but limited commercial diversification.
The effect of these trends is evident not only in fiscal health but in the level of public services and quality of life each city can provide. Cities with stronger growth in assessed value, sales tax, and diversified revenues have been able to reinvest in city infrastructure, parks, and facilities, maintain competitive staffing, and expand programs that enhance daily quality of life.
Burlingame has consistently leveraged its strong revenue growth to deliver high-quality community facilities and public spaces, and invested approximately $52.3 million to build its new Community Center at Washington Park through a bond issuance (completed in 2022), a 38,000- square-foot LEED-Gold facility that serves as a year-round hub for recreation, arts, and public events. It is now advancing the Downtown Town Square and Waterfront Redevelopment projects, transforming underutilized parcels into vibrant public gathering areas with open space, trail connections, and waterfront amenities. The Parks and Recreation Department has also significantly expanded its year-round programming, Movies and Music in the Park, art and wellness classes, and senior recreation offerings.
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Menlo Park’s strong fiscal position has enabled major civic investments that extend well beyond core municipal services. In 2024, the city opened the Belle Haven Community Campus, a 37,000-square-foot facility combining a public library, senior and youth centers, an aquatics area, and a gymnasium. The city has also leveraged redevelopment opportunities, like the Stanford Research Institute (SRI) International campus, a major research and innovation hub now being redeveloped into a mixed-use district, along with Downtown and Bayfront projects that add housing, office space, and public amenities. These investments are supported by a strong Library and Community Services Department, which runs nine libraries, recreation centers, and community spaces across the city. Together, they show how Menlo Park’s financial stability translates into well-maintained places, active programs, and a strong sense of community.
San Carlos has turned sustained fiscal growth into visible, community-wide improvements. As mentioned above, through its East Side Innovation District Vision Plan, the city transformed older industrial parcels into a thriving hub for life-science and advanced-manufacturing companies, creating new jobs and significantly increasing property values, and adding roughly $11.6 million in development impact fees and over $4 million in other contributions, including upgrades to Old County Road, and a new traffic light.
Development agreements in this area have generated roughly $80 million in various community benefits from funding infrastructure upgrades to affordable housing, and public amenities. With this expanded revenue base, San Carlos has invested heavily in its parks, youth and senior programs, and popular community events like Hometown Days and Music in the Park.
These are just a few examples of how economic reinvestment directly supports an active, connected, and high-quality community life. While each community is different in their own ways, and Pacifica is unique and different from Menlo Park, San Carlos, and Burlingame, a takeaway from these comparisons is how assessed valuation growth helps sales tax growth and together this revenue growth funds increased services and capital improvements.
SECTION 3: PATHWAYS TOWARD FISCAL SUSTAINABILITY
Understanding what makes a community thrive provides important context for how Pacifica can approach its own fiscal sustainability. The qualities that define vibrant communities, like economic diversity, organizational capacity, strong infrastructure, and civic trust, cannot be achieved without a stable financial foundation. A city cannot maintain vibrant public spaces, invest in infrastructure, or attract and retain talent without stable and reliable resources to support those goals.
Unfortunately, for Pacifica, advancing toward long-term sustainability requires more than closing a short-term budget gap, it calls for a strategic framework that balances fiscal discipline with investment in the community’s future.
The next section begins to outline potential pathways toward achieving fiscal sustainability, which combines revenue strategies, organizational investments, economic opportunities, and housing/mixed-use development to form an integrated approach to financial health. This includes exploring potential voter-approved measures to stabilize recurring revenues; pursuing cost-recovery strategies and operational efficiencies; leveraging grants and partnerships; and investing in economic and housing development that expands the local tax base over time.
Each of these strategies plays a distinct role, but together they represent a single purpose: to ensure that Pacifica can continue providing high-quality services, maintaining vital infrastructure, and supporting a resilient, well-functioning organization capable of delivering on the community’s expectations.
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A) REVENUE STRATEGIES CURRENTLY UNDERWAY
Ongoing Revenue Generation & Enhancement
The City’s ongoing efforts to strengthen revenue generation are a critical component of its longterm fiscal strategy. Developing a 10-year financial projection of revenues and expenditures as part of the City’s budget process is a financial best-practice that reflects multiple initiatives already underway to diversify and enhance revenues, improve compliance, and attract outside funding. These efforts include pursuing grant opportunities for major capital projects and community programs by City departments and contract assistance from Townsend Public Affairs, conducting business license tax and cannabis compliance audits by the City Finance Department and HdL Companies, and helping small businesses in Pacifica through the City’s Economic Development program.
Development, Impact Fee, Cost Allocation Plan, and Citywide Fee Study A key part of Pacifica’s fiscal sustainability strategy involves ensuring that the City’s fees for services accurately reflect the cost of delivering these services. To that end, the Finance Department is currently advancing a comprehensive review of development-related and citywide fees, as a comprehensive Development Impact Fee (DIF) Study, Cost Allocation Plan, and Citywide Fee Study.
This work is particularly important given that Pacifica’s Development Impact Fees have not been comprehensively reviewed in decades, resulting in fees that no longer reflect the true costs of infrastructure expansion and public facility impacts generated by new growth. The upcoming study is expected to result in substantial adjustments to the City’s DIF structure, ensuring that new development “pays its way” by contributing proportionately to the roads, parks, utilities, and public safety facilities it necessitates.
It is hard to estimate the fiscal impact from this study. The City’s FY 2025-26 budget does not assume any new DIF revenue, as the study is still underway and the fiscal impact will depend on both the adopted fee schedule and the pace of new development. Once implemented, however, the revised fees could generate meaningful one-time revenue to support infrastructure needs and offset General Fund pressures.
To provide a sense of scale, one of the recent projects in Pacifica demonstrates the magnitude of potential revenues when new development occurs under updated fee structures. A good example is the 801 Fassler Avenue (Pacifica Heights) residential development, a 24-unit townhome project located along Fassler Avenue. This project demonstrates how new growth contributes directly to City infrastructure funding through Development Impact Fees and related charges. For this project, the City collected a total of $540,326 in one-time fees, distributed across multiple categories, including $333,313 in Development Impact Fees (Highway 1 Impact Fee, In-Lieu Park Dedication Fee, and Subdivision Drainage Fee), to help fund transportation improvements, parks and recreation facilities, and storm drainage infrastructure needed to serve new development.
While these revenues are one-time and project-specific, they demonstrate the scale of fiscal contribution that even modest development can provide toward the City’s capital infrastructure and service needs, which is separate and apart from the ongoing property tax and sales tax revenue that come into play once the homes are occupied. Importantly, these fees were based on the City’s outdated schedule, and the upcoming Development Impact Fee Study is expected to identify opportunities for greater cost recovery so future development may better offset its infrastructure impacts.
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Once completed, this comprehensive study will help the City better align its cost-recovery practices with actual service demands, reducing reliance on the General Fund to subsidize private development-related activities to ensure that growth contributes proportionately to the infrastructure and services it requires.
Separately from the Development Impact Fees, the current Long-term Financial Forecast conservatively includes only $100,000 in additional General Fund recovery through User Fees; however, the study results may identify a significantly greater opportunity for cost recovery, subject to City Council policy direction. Similar to the Development Impact Fees, the City’s User Fees and Cost Allocation Plan have not been comprehensively updated in more than a decade (with the last CAP based on the FY 2010-11 budget).
Economic Development Workplan
As part of the City’s broader fiscal sustainability strategy, staff developed a focused Economic and Housing Development Work Plan (Attachment G) to guide ongoing efforts to improve Pacifica’s economic base and attract long-term investment. This Workplan is consistent with the Council’s Strategic Plan, reflects a strategic approach to leveraging limited resources toward the City’s highest priorities, including revitalizing commercial areas, accelerating housing and mixed-use opportunities, and enhancing Pacifica’s visibility as both a destination and a place to live, work, and invest. The full, detailed Work Plan will be shared with Council in early 2026, and after the hiring of the new Economic and Housing Development Manager.
B) OPPORTUNITY SITES
8 Sites in Economic Opportunities Study (approx. $3.4 Million per year) In March 2023, the City Council received a presentation on the Economic Opportunities Study prepared by Kosmont Companies, which outlined 30 potential economic development strategies to strengthen Pacifica’s business economy (Economic Opportunities Study <https://www.cityofpacifica.org/home/showpublisheddocument/14938/638206138381770000>).
The study included 8 priority opportunity sites, which could provide the City with approximately $2.7 Million per year in additional revenues. In October 2025, Kosmont Companies prepared an updated fiscal benefit analysis for these sites to reflect current market conditions, construction costs, and the City’s voter-approved increases to sales tax (+0.5%) and Transient Occupancy Tax (+3%). Based on the revised assumptions, the combined annual fiscal benefit to the City is now estimated at approximately 3.4 million per year:
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Beach Blvd. Property (approx. $1,200,000 per year)
The City’s Economic Development team is working on a project to market the Beach Blvd. property, a 3.5-acre coastal site identified as Pacifica’s top redevelopment opportunity that could become a 100+ room hotel plus restaurants.
This mixed-use project would generate property tax, sales tax, and transient occupancy (hotel) tax revenues if such a property sale and hotel development were successful.
The concept is discussed in more detail in the Economic Opportunities Study mentioned earlier.
C) HOUSING DEVELOPMENT
Housing development is not only a matter of state compliance, but also is a cornerstone of local economic vitality. In California, the ability of cities to sustain vibrant economies is increasingly tied to how effectively they plan for, permit, and support housing development.
Each new home brings benefits across the local economy: construction jobs, demand for goods and services, additional property and sales tax revenue, and long-term community stability as residents live, work, and invest locally.
For cities like Pacifica, where geography and land constraints limit large-scale growth, strategic housing development, particularly in mixed-use areas, serves as one of the most effective tools to expand the economic base and address structural fiscal challenges. Housing supports population retention, workforce availability, and local spending, all of which are essential to the City’s long-term sustainability.
Despite a vibrant small business culture, Pacifica’s current economic structure inherently limits its revenue potential. Excluding large national chains and fuel stations, the majority of Pacifica’s top 100 sales tax producers, primarily local restaurants, cafes, and independent retailers, generate modest annual sales tax revenues. A typical popular restaurant contributes on average roughly $5,000 to $10,000 per year, while most independent retail stores generate on average about $4,000 to $6,000 annually.
With 93% of Pacifica’s parcels classified as residential and only 4% zoned for commercial use, most of which are occupied by small, locally owned businesses, the City’s current sales tax base is among the narrowest in San Mateo County.
By contrast, new housing (particularly market-rate or part of larger mixed-use projects) presents a far greater and more stable economic opportunity. These projects generate significant one-time revenues through development impact fees and building permits, and create ongoing property taxes once the homes are occupied. New residents, in turn, expand the local customer base, supporting neighborhood restaurants, shops, and service providers, and help increase the City’s small business economy.
The integration of Economic and Housing Development efforts positions Pacifica to pursue projects that strategically expand its revenue base, meet state housing mandates, and reinforce economic vitality in the community as further described below.
Housing Element & Regional Housing Needs Assessment
California’s Regional Housing Needs Allocation (RHNA) process has made housing production not only a fiscal and community goal but also a legal and planning requirement. The State mandates that every jurisdiction accommodate its fair share of the region’s projected housing Pacifica City Council 16 November 10, 2025
demand across income levels.
Like all cities in California, Pacifica is required to adopt a Housing Element under State Law.
This includes planning for and establishing the regulatory framework to accommodate a specified number of market and below-market housing units.
Pacifica’s current RHNA target of 1,892 new housing units underscores both the scale of this challenge and the opportunity it presents: aligning housing policy with economic development strategy can generate meaningful fiscal returns while fulfilling the City’s commitment to a more inclusive and sustainable community.
If Pacifica were to achieve its RHNA target of 1,892 housing units across all income levels, the fiscal impact would be substantial. Using current citywide market averages, an assessed value of $1.3 million for market-rate units and $500,000 for below-market units, with a base property tax rate of 1% plus local assessments (and conservatively assume an effective rate of approx.
1.1%) and Pacifica’s share of 18.93%, the estimated property tax benefit is summarized below:
• 1,044 moderate-income and market-rate units × $1.3 Million = $1.36 Billion • 848 lower-income units × $650,000 = $0.55 Billion
• Total = $1.91 B assessed value × 1.1% = $21.26 Million total property tax × 18.93% City share = $4.0 Million per year
This represents new, recurring General Fund revenue that would significantly strengthen the City’s long-term fiscal position, providing resources to maintain essential services, support organizational capacity, and invest in infrastructure. Beyond direct fiscal returns, housing development also stimulates broader economic activity, from construction employment and local spending at restaurants, shops, and service providers further increasing tax and business activity within the City. The number of housing units is also a factor when potential retailers decide whether or not open a new store in a community.
Over time, new residents also help sustain and diversify Pacifica’s small business community, expand participation in local programs and recreation services, and support the overall vitality of neighborhoods and schools. The resulting increase in population, when strategically located in mixed-use and infill areas, can also increase market demand, improve the viability of transit, and retail uses, and other community amenities, creating a more complete and connected community fabric. It is also the reason that cities with successful downtowns often concentrate more housing units and density close to their downtown area, generating customers within walking distance to desired stores and services.
In the sections that follow, housing development is explored not simply as a compliance measure, but as a core economic driver and community-building strategy, a means to strengthen Pacifica’s financial foundation, support local businesses, and foster the kind of thriving, balanced community envisioned in the City’s long-term strategic goals.
Sea Bowl Residential Proposal (approx. $255,000 per year) Toll Brothers has purchased the 9.2-acre property that was the former Sea Bowl site in Pacifica. They propose to develop the site with the construction of 91 market rate for sale residential units and 22 below market rate accessory dwelling units for rent.
As part of their application to the City, Toll Brothers provided a Market Study and Fiscal Analysis of the Sea Bowl Residential Proposal prepared by Economic & Planning Systems (EPS), shown in Attachment D. In line with the Opportunity Sites analysis above, the EPS study estimates that this residential development would generate over $400,000 in annual Pacifica City Council 17 November 10, 2025
revenue to the City and a net of $255,000 in annual revenue after deducting the cost of serving these new residential units as shown below:
Addressing a Common Misconception: Does Housing Strain City Finances? A common concern in many communities, including Pacifica, is that new housing development creates a fiscal burden by increasing demand for services such as police, fire, roads, parks, and utilities. While this perception is understandable, data from economic and fiscal impact analyses across California show that when housing is strategically planned, it contributes net positive fiscal and economic benefits to cities.
Several key points help clarify this dynamic:
• Modern housing projects pay their way. As demonstrated above, new development is assessed at current market values, generating substantially higher property tax revenue than older housing stock. Impact fees, development impact fees, and utility connection charges help offset infrastructure and service costs upfront. • Most City costs are fixed, not per-unit. The cost of maintaining police, fire, and administrative services does not rise linearly with population growth. In many cases, the marginal cost of adding new residents is significantly lower than the new revenues they generate.
• Strategic location matters. Infill and mixed-use projects, especially near existing infrastructure, make efficient use of City systems, minimizing long-term maintenance costs while supporting walkability and local business activity. • Housing supports economic circulation. New residents shop locally, eat locally, and use local services, directly supporting Pacifica’s small business community and sales tax base.
• The real fiscal risk lies in stagnation. When housing production lags behind demand, assessed value growth slows, commercial vitality declines, and existing infrastructure ages without sufficient reinvestment, creating greater long-term fiscal strain.
In short, well-planned housing development is not a financial liability, it is an investment.
Projects that are fiscally analyzed, supported by appropriate impact fees, and integrated with infrastructure planning tend to produce recurring General Fund surpluses and strengthen the City’s long-term financial capacity.
Recent research and fiscal presentations by Kosmont Companies at the League of California Cities Annual Conference reinforce this conclusion. As Kosmont notes, “Housing is not a loss Pacifica City Council 18 November 10, 2025
leader-it’s a growth driver.” In today’s economic environment, housing creation directly supports local fiscal health by generating new tax revenues, increasing assessed property values, and sustaining neighborhood businesses. The Kosmont analysis shows that residential zoning and mixed-use redevelopment create strong residual land value and fiscal benefits, particularly when paired with financing tools such as Enhanced Infrastructure Financing Districts (EIFDs).
Kosmont further emphasizes that housing acts as a community economic catalyst, stimulating consumer demand for local services and retail, capturing household spending that might otherwise leave the city, and helping maintain a diverse and stable local economy. In this way, housing is not simply a regulatory requirement but a key pillar of long-term economic sustainability for California cities.
Community Facilities Districts (CFDs)
Community Facilities Districts (CFDs) are a financing mechanism that allows local government to levy a special tax option to raise funds for a variety of purposes, including infrastructure costs (such as streets, roads, sidewalks, and traffic signals), development impact fees, and operating and maintenance costs. They can also be used to fund the construction of schools and libraries and the purchase of open space.
In recent years, cities and counties in California are increasingly exploring the formation of CFDs to pay for operating costs and maintenance and improvement of infrastructure in new developments. While CFDs cannot cover all General Fund operating costs, they can be used to fund a number of General Fund and Capital Improvement expenses including police protection services, fire protection and suppression services, ambulance and paramedic services, lighting of parks, parkways, streets, traffic signals, roads and open space, flood and storm protection and water quality improvement services.
In summary, CFDs can further supplement the General Fund and Capital Project resources, helping finance infrastructure and service needs associated with new residential and commercial development and may be part of Pacifica’s financial strategy in the years ahead.
They also offer a way to “unstick” proposed developments in communities where new commercial and residential projects have been approved but have yet to move forward due to interest rate and other challenges in today’s economy.
D) POTENTIAL REVENUE MEASURES - GENERAL FUND
Potential Revenue Measures
Another area of opportunity to address the City’s General Fund projected deficits is to consider revenue measures that would be brought before Pacifica voters for consideration.
With the assistance of the City’s Business License Tax consultant, HdL Companies, and Financial Consulting from Regional Government Services (RGS), staff has identified several potential revenue sources that could be considered by the Council to address the City’s General Fund revenue shortfall in future years. They are summarized in the sections below.
Business License Tax ($88,570 to $490,070 per year)
The Business License Tax (BLT) is charged to anyone doing business in the City. It is a common revenue used to fund City services throughout California with over 450 of the 483 cities in California levying a BLT. The BLT recognizes the link between City services and infrastructure and the use of these by local businesses.
Pacifica requires all businesses operating within the City to obtain a business license and pay business license tax per section 3-1.101 of the City's Municipal Code. This revenue is locally Pacifica City Council 19 November 10, 2025
controlled and funds essential services.
For the last three fiscal years, businesses in the City of Pacifica reported average total gross receipts of $832,000,000. This is calculated from businesses reporting and taxed on gross receipts and does not include businesses taxed on units or flat rates.
Currently, most businesses in Pacifica are charged between $0.35 and $0.77 per $1,000 of gross receipts. Revenue from the Business License Tax during the current fiscal year is $582,000.
2022 Business License Tax Study
In 2022, HdL Companies performed a detailed study of the City’s Business License Tax Ordinance and rate structure. The study included three potential models • Model 1 - 20% rate increase of the gross receipts portion of the rate (increased revenue = $88,570/year)
• Model 2 - $100 base rate + $1.50 per thousand of gross receipts over $25,000 (increased revenue = $208,680/year)
• Model 3 - $100 base rate + $2 to $3 per thousand of gross receipts based on business category. (increased revenue = $490,070/year).
Business License Tax Recommendation
The HdL study recommended proceeding with Model 3 if the City elects to update their Business License Tax ordinance. If there is Council interest in the Business License Tax revenue option, Staff recommends contracting with HdL to update Model 3 with current Business License Tax data and conducting voter research to inform Council’s consideration at a future Council meeting.
Utility User Tax ($2 Million to $3.1 Million per year)
Cities may impose a Utility User Tax (UUT) on utility services, including electricity, gas, water, sewer, solid waste, video (cable TV and streaming services), and telecommunications. Utility companies are responsible for collecting the taxes and remitting them to the City. Utility user tax rates throughout the State range from 1 % to 11%. Over 150 of the state’s 483 cities impose a Utility Users Tax.
Increases in the Utility Users Tax requires a majority vote at a General Election. Prior to 1986, increases in the UUT could be adopted by a majority vote of the City Council.
The City of Pacifica has a Utility User Tax (UUT) of 6.5% that is charged on electricity and gas. In the 2025-26 fiscal year, the UUT is estimated to generate $2.87 Million in revenues.
Here is a comparison of UUT rates in Pacifica and neighboring cities in San Mateo County. 2022 Utility Users Tax Study
Pacifica City Council 20 November 10, 2025
In 2022, HdL Companies performed a detailed study of the City’s Utility Users Tax Ordinance and rate structure.
This study noted that the City’s current UUT is collected on electricity and gas service. But it is not collected on telecommunications (phone), prepaid wireless, video (Cable TV and streaming services), and water which for several other neighboring cities are included in the UUT tax.
The two options reviewed in this study were:
• Model 1 - Lower the Pacifica UUT rate from 6.5% to 5% and add the categories of telecommunications (phone), prepaid wireless and water to the ordinance. (Increased revenue of $2 Million/year)
• Model 2 - Keep the Pacifica UUT rate at 6.5% and add the categories of telecommunications (phone), prepaid wireless and water to the ordinance. (Increased revenue of $3.1 Million/year)
Utility Users Tax Recommendation
If there is Council interest in the Utility Users Tax revenue option, Staff recommends contracting with HdL to update Model 1 and Model 2 with current Utility Users Tax data and conducting voter research to inform Council’s consideration at a future Council meeting.
Parcel Tax ($6 Million per year)
A Parcel Tax is a non-ad valorem, or non-value based, tax on parcels of property. It can either include a flat amount per parcel or building square footage or establish different rates based on land use. Unlike a Business License Tax or a Utility Users Tax which can be adopted by a majority vote at a General Election, a Parcel Tax can be adopted by a 2/3 vote at a General Election. A Parcel Tax must be a Special Tax meaning the revenue must be used only for specific purposes identified in the ballot measure language approved by voters. The specified purpose can include ongoing operations as well as capital projects.
This revenue source offers the highest potential yield of the General Fund revenue options evaluated, depending on the rate structure and voter-approved tax rate. 2025-26 San Mateo County Assessor parcel data was used to develop initial modeling that simulates different rate structures, each calibrated to generate approximately $6 million in net annual revenue (after an assumed 1.5% delinquency). Such a tax could be set in several different ways including:
Single Tax Rate per Parcel
This option uses a single tax rate per parcel regardless of land use type. Setting a single flat tax rate of $478.51 per parcel across all taxable properties generates approximately $6 million net annual revenue after delinquencies. A single flat tax rate represents a uniform tax burden, simple to administer but less reflective of parcel size or use. Single-family residence makes up approximately 86% of the parcels.
Tax Rate per Building Square Foot, Lot Size, or Units
This type of structure would use building square footage as the basis for both residential and commercial parcels, creating a direct link between parcel size and the amount of tax owed.
Larger structures-such as commercial centers or multi-family buildings-would contribute proportionally more than smaller single-family homes.
Alternatively, the rate could be based on lot size to capture the relative intensity of land use, or on the number of dwelling units for residential parcels, ensuring that multi-unit properties Pacifica City Council 21 November 10, 2025
contribute in proportion to the number of occupied units. While this approach may better align the tax burden with property scale and potential service demand, it introduces greater administrative complexity, as building and unit data must be verified and consistently maintained with County Assessor records.
Tax Rate by Land Use
This model would set the Parcel Tax by land use. The tax could be a flat rate or a per square foot rate for each land use. This approach might also set a flat rate for residential units and a per square foot rate for commercial parcels. For instance, setting a base flat tax rate for a single-family residential and base x 3 for all other types may still result in desired tax revenue, but shift the burden slightly off single-family parcels.
Similarly, a blended tax rate structure is also possible, such as keeping single-family parcels to a flat tax rate but utilizing lot size or units for commercial or multi-unit lots. This hybrid structure could allow for taxing underutilized vacant lots differently, while emphasizing commercial and industrial contributions.
These hybrid scenarios entail greater administrative complexity, as building and unit data must be verified and consistently maintained with County Assessor records.
Parcel Tax Recommendation
If there is Council interest in the Parcel Tax revenue option, staff recommends contracting with a firm with Parcel Tax expertise to analyze the parcels in Pacifica and conducting voter research to inform Council’s consideration at a future Council meeting. Although preliminary analysis shows that there are about 12,730 taxable parcels, deeper analysis would need to be completed to determine which parcels are exempt from the Parcel Tax and then calculate the potential Parcel Tax rates and revenue generated under all Parcel Tax scenarios described above.
Several other revenue measures were not considered or recommended at this time to address the City’s General Fund revenue shortfall, but they are discussed in Attachment EF
E) POTENTIAL REVENUE MEASURES - UNFUNDED CAPITAL PROJECTS As noted earlier, City staff will continue to look for opportunities to move the projects on the Unfunded Project List to funded. This includes aggressively seeking grants and external funding from Federal, State, Regional, and County sources.
General Obligation Bond
In recent years, some cities in the Bay Area have considered and, in some cases, successfully passed General Obligation Bonds (also known as G.O. Bonds) to finance large-scale capital improvements. Given the size of Pacifica’s current unfunded capital need of approximately $371 million, a G.O. Bond program will likely need to be part of the City’s long-term strategy as well.
General Obligation Bonds are bonds that are funded by levying a property tax that is based on the value of a property. This is typically done with a tax rate that is set at $X per $100,000 of assessed value. The tax is collected on an annual basis over the life of the bonds - typically a period of 25 to 30 years.
This revenue source cannot be used for operating revenues but can be used for infrastructure and Unfunded Capital Project needs. In Pacifica, the City could consider a G.O. Bond proposal to be considered by the voters at a future General Election. The amount of the G.O. Bond could be set at either the entire amount of the Unfunded Projects list or a portion of the projects on the list. This revenue requires 2/3 voter approval for the amount of the bond issue and use of the bond proceeds. G.O. Bonds issued by schools have a lower 55% voter approval threshold that Pacifica City Council 22 November 10, 2025
was adopted by the voters in 2000.
Measure Q General Obligation Infrastructure Bond in San Bruno An example of how a General Obligation Bond could address the Infrastructure and Facilities needs in Pacifica is the recent passage of Measure Q in the City of San Bruno.
San Bruno identified almost $500 Million in Unfunded Capital Project needs. That City reviewed these needs and brought to the voters a General Obligation Bond of $102 Million to cover repairs to stormwater systems, upgrades to fire stations and equipment and repaving and fixing City streets.
Measure Q is financed by a tax on real property for a period of 15 years. The average tax rate required to be levied to pay the debt service on these bonds is $0.03 per $100 (or $30.00 per $100,000) of the assessed valuation of the property to be taxed. San Bruno voters passed this measure with a 73% Yes vote (2/3 required for passage).
Other Financing Alternatives
The attached memo from the City’s financial advisor also identifies alternative financing tools that may merit future consideration to address Pacifica’s Unfunded Capital Projects needs (Attachment F).
• Certificates of Participation (COPs) or lease-revenue bonds, which do not require voter approval and can fund capital improvements secured by City assets or lease payments. COPs are typically repaid from the City’s General Fund or other available revenues over a 20-30-year term. Based on current market conditions, an annual debt service payment of approximately $1 million could support about $17 million in COP financing, depending on interest rates and repayment structure. While this option would increase the City’s General Fund debt service, it would also allow the City to leverage funding for priority capital projects that cannot be financed through existing revenues. This mechanism could allow the City to fund priority capital projects in phases while maintaining flexibility to align future bond issuances with voter-approved measures or other long-term revenue strategies.
• Direct Bank Loans, which do not require voter approval and may be more cost-efficient for smaller projects (typically in the $5 Million to $7 Million range) due to lower issuance costs. The recent Pacifica Civic Center Renovation project is an example of a project in Pacifica that was funded in part by a Direct Bank Loan; and • Parcel Tax-Secured Bonds, which, while less common, could finance certain publicsafety or infrastructure investments and provide more flexibility for operational uses.
These bonds require two-thirds voter approval to sell the bonds and establish a new parcel tax to pay for the bond debt over a 15-to-30-year period.
If the City Council wishes to explore any of these options further, staff would work with the municipal advisor and bond counsel to develop preliminary tax-rate models, evaluate funding scenarios, and identify potential election timelines (G. O. Bond). This would allow the Council to weigh the fiscal benefits, voter support, and community priorities before deciding whether to pursue a bond measure.
SECTION 4: COUNCIL DIRECTION & NEXT STEPS
NEXT STEPS
At tonight’s meeting, the City Manager is seeking the Council’s direction regarding which Pacifica City Council 23 November 10, 2025
potential revenue measures should be advanced to the next phase of feasibility assessment.
Once the City Manager has received that direction, work will continue advancing this matter for discussion with the Council and the community. That process will include the following steps:
1. Further work on assessing the feasibility of placing one or more revenue measures (Business License Tax, Utility Users Tax, Parcel Tax or General Obligation Bond) on the November 2026 ballot.
2. Retaining consultant expertise to assist the City with educational community outreach and public engagement and polling on the potential revenue measure.
3. Returning to the City Council with more detailed fiscal estimates and voter feasibility of the revenue option(s) that the City Council has selected.
4. Returning to the City Council for a decision on moving ahead with a revenue measure - by April 2026.
5. If the Council moves ahead with a revenue measure, developing the proposed ordinance(s) and ballot measures on a timeline to meet County ballot requirements - by June 2026.
Fiscal sustainability is not only about maintaining a balanced budget, but also about building capacity, trust, and opportunity so that Pacifica can continue to evolve as a strong, connected, and thriving coastal community. The decisions and discussions ahead will help define how the City positions itself to meet community expectations, protect essential services, and invest in the future this community envisions.
ALTERNATIVE ACTION:
The City Council may decide to direct staff to take alternative actions to address the projected City budget deficit starting in the 2026-27 fiscal year. These may include:
1. One or more of the alternatives and options described earlier in the Alternatives to Potential Revenue Measures attachment to this report.
2. The City Council may want to pursue additional revenue options to address needs beyond the current level of services described in the Restoring City Services, Enhancing City Services & Capital Project Needs section of the report.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
This report and its recommendations support the City Council’s Strategic Goals and the City’s efforts towards Fiscal Sustainability.
FISCAL IMPACT:
Funding to continue work on the Revenue Options Study is included in the 2025-26 budget. As work commences to further develop any potential revenue measure for the November 2026 ballot, including retaining a firm to assist with education, outreach, and polling, staff will assess whether there is a need for additional funding for this work at that time.
ORIGINATED BY:
City Manager's Office
Pacifica City Council 24 November 10, 2025
ATTACHMENT LIST:
Attachment A - Long-Term Financial Forecast & Assumptions (PDF) Attachment B - City of Pacifica Staffing Study by Raftelis June 2024 (PDF) Attachment C - Other Unfunded Projects List (PDF)
Attachment D – Sea Bowl Residential Proposal Analysis by Economic & Planning Systems (EPS) (PDF)
Attachment E – Other Revenue Measures Not Considered (PDF) Attachment F – Memo From The City’s Financial Advisor Capital Funding Options (PDF) Attachment G - ED Workplan Exec Sum Final (PDF)