Projected costs for 2026, which are based on the change in various Bay Area consumer price indices. that have been applied to Recology’s allowable costs in accordance with the Agreement.
This increase, which is 1.59% lower than the requested 4.53% increase, is based on several adjustments to Recology’s rate calculation as described in Section III. HF&H Analysis and reflected in Table 3. The adjustments were discussed with Recology’s management to promote transparency and comprehension. The major components of the 2.94% recommended rate increase are as follows:
1.68% increase due to increases in labor & labor-related costs (the most significant increases were in salary and wages and workers compensation) 1.09% decrease due to lower fuel costs (decrease in actual cost) 2.38% decrease due to fuel reconciliation (one time reconciliation of overpayment of fuel for prior years due to actual costs being lower than Recology was compensated for)
1.25% increase due to higher lease costs (new purchases shown on the lease schedule not included in prior CBRA)
2.88% increase due to higher other costs (a correction of actual cost) 0.41% decrease due to gross receipt surplus (higher projected revenue) Table 1 summarizes the impact of each component that affects the recommended rate adjustment factor.
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Table 1: Rate Adjustment Factor Components
Note: Numbers may not sum exactly due to rounding
% Change
Cost of Operations:
Labor & Labor Related Costs 1.68%
Vehicle-Related Costs 0.84%
Fuel Costs -1.09%
Fuel Cost Reconciliation (FY23 & FY24) -2.38%
Organics Processing -0.14%
Lease Costs 1.25%
Other Costs 2.88%
Total Cost of Operations 3.05%
Profit 0.34%
Pass-Through Costs:
Recyclable Materials Processing -0.08%
Solid Waste Disposal -0.16%
C&D Processing - Ox Mtn -0.04%
C&D Processing - Blue Line 0.09%
Total Pass-Through Costs -0.19%
City Fees 0.15%
Total Recology Compensation 3.35%
Project Revenue Surplus -0.41%
Rate Adjustment Factor 2.94%
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October 20, 2025
II. Background
The City and Recology entered into an eight-year agreement for recyclable materials, organic materials, and solid waste collection services effective February 9, 2010. In 2016, the City and Recology agreed to an extension of the existing agreement through December 31, 2022.
In consideration of the five-year extension, Recology agreed to change the frequency of recycling service for single family customers from bi-weekly to weekly commencing January 2017 at no additional cost to the City or the ratepayers. In 2022, the City and Recology agreed to an additional extension for ten more years, moving the termination date to December 31, 2032, with the potential for an additional five-year extension, contingent upon mutual written agreement by December 31, 2031.
In accordance with Section 11.02 of the Agreement, Recology’s compensation was set for 2023 based on the maximum allowable rates agreed to by the City and Recology. In accordance with Section 11.02.D of the Agreement, subsequent rate adjustments shall be adjusted annually commencing January 1, 2024, and continuing through the remaining term of the Agreement, including any extension periods. The Agreement requires the adjustment to be determined using one of two methodologies: (1) an index-based adjustment; or (2) a CBRA. Each adjustment methodology is briefly described below.
Index-based methodology adjustments are intended to adjust the revenue requirement by increasing or decreasing specific line-item costs by related indices to adjust Recology’s compensation to be more reflective of the actual changes in costs to provide services, without completing a full review or audit of Recology financials on an annual basis.
The CBRA methodology involves a review of Recology’s actual cost of operations and operational statistics (e.g., staffing levels, routes, route hours, customers and their service levels) to determine the actual allowable total annual cost of operations for the most-recently completed rate year to forecast Recology’s allowable costs. The intent of performing a CBRA is to examine the actual costs to serve the City’s ratepayers, instead of relying on Recology’s original proposed costs, and take into consideration the cost impacts related to changes in inflation, deflation, number of customers, and the service levels of each customer.
RY17 was determined using the CBRA methodology. Table 2 summarizes the rate-setting methodology prescribed through the duration of the Agreement.
Table 2: Rate-Setting Methodology Schedule
Rate Year
Commencement
Date
Adjustment
Methodology Submittal Date
15 January 1, 2024 Index-Based September 1, 2023
16 January 1, 2025 Index-Based September 1, 2024
17 January 1, 2026 Cost-Based June 1, 2025
18 January 1, 2027 Index-Based September 1, 2026
19 January 1, 2028 Index-Based September 1, 2027
20 January 1, 2029 Cost-Based June 1, 2028
21 January 1, 2030 Index-Based September 1, 2029
22 January 1, 2031 Index-Based September 1, 2030
23 January 1, 2032 Cost-Based June 1, 2031
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III.HF&H Analysis
Recology’s compensation calculations for RY17 were submitted on June 17, 2025. Recology calculated an RY17 compensation requirement of $12,803,651 and total RY17 revenue at current rates to be $12,249,330. To address the projected $554,321 gross receipt shortfall, Recology requested a 4.53% increase to current rates. HF&H’s review of and adjustments to Recology’s Application determined a 2.94% increase to current rates was necessary to compensate Recology for its allowable expenses. HF&H reviewed these changes with Recology’s management and the City.
Table 3 summarizes HF&H’s proposed adjustments to Recology’s projected RY17 gross receipts and compensation. Following Table 3 is a detailed description of our review of each expense line item and the basis for each adjustment.
Table 3: HF&H Adjusted RY17 Rate Application Summary
Cost of Operations:
1 CBA Labor Costs $4,185,458 ($115,985) $4,069,473
2 Non-CBA Labor Costs 672,554 0 672,554
3 Worker's Compensation 312,807 0 312,807
4 Payroll Taxes 267,635 (6,650) 260,984
5 Vehicle-Related Costs 545,902 0 545,902
6 Fuel Costs 524,600 (33,634) 490,966
7 Fuel Cost Reconciliation (FY23 & FY24) (292,073) 0 (292,073) 8 Organics Processing 618,322 0 618,322
9 Lease Costs 904,940 0 904,940
10 Other Costs 1,826,995 (2,730) 1,824,264
11 Total Cost of Operations $9,567,139 ($159,000) $9,408,139 12 Profit $1,063,015 ($17,667) $1,045,349
Pass-Through Costs:
13 Recyclable Materials Processing $145,524 ($8,148) $137,377 14 Solid Waste Disposal 972,087 (6,647) 965,440
15 C&D Processing - Ox Mtn 54,430 (2,387) 52,042
16 C&D Processing - Blue Line 11,564 0 11,564
17 Total Pass-Through Costs $1,183,605 ($17,181) $1,166,423 18 City Fees $989,892 $0 $989,892
19 Total Calculated Costs $12,803,651 ($193,848) $12,609,802 20 Projected Revenue at Current Rates $12,249,330 $0 $12,249,330 21 Surplus/(Shortfall) ($554,321) $193,848 ($360,473)
22 Rate Adjustment Factor 4.53% -1.59% 2.94%
Recology's
Requested
RY17
HF&H
Adjustments
HF&H
Adjusted RY17
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Packet Pg. 296 Attachment: Attachment 1 - Pacifica RY17 CBRA 10.20.25 [Revision 1] (6054 : Resolution - Adopt Resolution Confirming 2026 Recology Rate HF&H Consultants
590 Ygnacio Valley Rd. Suite 105
Walnut Creek, CA 94596
Phone: (925) 977-6950
Web: hfh-consultants.com
RECOLOGY’S COMPENSATION FOR RATE YEAR SEVENTEEN
HF&H Scope of Work
The City engaged HF&H to perform a review of the Application in accordance with Section
11.03(B) of the Agreement. HF&H staff performed this review based upon procedures agreed upon by the City and HF&H, as documented in our proposal dated August 14, 2025, and upon the Agreement between the City and Recology. These procedures included the following tasks. Any adjustments to Recology’s Application based on conducting the following tasks are explained in detail in the “Findings” section.
Task 1: Preliminary Application Review
As part of Task 1, Preliminary Application Review, HF&H completed the following tasks:
1a. Reviewed Recology’s Application for completeness and compliance with the procedures contained in Article 11 and Attachment K of the Agreement. 1b. Reviewed Recology’s Application for mathematical accuracy and logical consistency to determine that the Application was mathematically correct, that the rows and columns of numbers add down and across as intended, and that the stated assumptions were in fact used in the RY17 compensation calculation. Determined that the Application was internally consistent and that any summary schedules agreed to the supporting schedules and worksheets.
1c. Determined what information still needed to be acquired and sent a request for additional information to Recology.
Task 2: Expense Review
As part of Task 2, Expense Review, HF&H completed the following tasks:
2a. Verified that Total Cost of Operations agreed to Recology’s audited financial statements and investigated any significant differences. We reviewed Recology’s audited financial statements, including the notes and supplemental information for background information.
2b. Recalculated the allocation factors (routes, single family customers, tonnage, and drop box hauls) based on data received from Recology and compared them to those used by Recology in the Application.
2c. Reviewed Recology’s general ledger for non-allowable costs including verifying the nonallowable costs had been properly excluded in the Application. We reviewed the general ledger for specific accounts such as legal fees.
2d. Verified the allocation of costs in the Application was in accordance with the methodology in the Agreement.
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2e. Reviewed projected organic material processing costs including tonnage assumptions and rate per the Agreement. We verified the Application properly used the actual tons processed for the 12 months ending April 30, 2025 to project processing costs for the forthcoming rate year (in accordance with Attachment K of the Agreement). We compared the actual tons processed to supporting documentation provided by Recology. 2f. Verified the profit calculation is in accordance with Section 4.4 of Attachment K. 2g. Reviewed projected recyclable material processing costs including tonnage assumptions and rate per the Agreement. We verified the Application properly used the actual tons processed for the 12-months ending April 30, 2025 to project processing costs for the forthcoming rate year (in accordance with the Agreement). We compared the actual tons processed to supporting documentation provided by Recology. 2h. Reviewed projected disposal costs including tonnage assumptions and rate per the Agreement. We verified the Application properly used the actual tons processed for the 12-months ending April 30, 2025 to project disposal costs for the forthcoming rate year (in accordance with the Agreement). We compared the actual tons processed to supporting documentation provided by Recology.
2i. Verified the proper calculation of City fees payable by Recology has been included in the Application.
Task 3: Total Projected Revenue and Rate Adjustment Factor Calculation As part of Task 3, Total Projected Revenue and Rate Adjustment Factor Calculation, HF&H completed the following tasks:
3a. Verified Recology’s projected revenue at current rates by calculating projected revenue through multiplying current rates with current subscription and reviewed supporting documentation for mathematical accuracy in accordance with Section 4 of Attachment K. The projected revenue at current rates is then used to determine the necessary rate adjustment factor to cover the difference between total calculated costs and projected revenue.
3b. Recalculated the rate adjustment factor in accordance with Section 4.6 of Attachment K to the Agreement.
Findings
Recology’s calculated contractor’s compensation for RY17 was $12,803,651. In accordance with the City’s request, HF&H reviewed Recology’s calculations. We revised the compensation calculations to conform to procedures specified by the Agreement as described below. The final recommended RY17 contractor’s compensation is $12,609,802, a $193,848 decrease.
The following describes HF&H’s analysis and recommendations of the cost components of Recology’s Application:
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1. Total Cost of Operations: HF&H recommends a net decrease of $159,000 (Table 3, Row 11) to Total Annual Cost of Operations due to the following:
a. Collective Bargaining Agreement Labor Costs: In accordance with Attachment K, Section 4.3.1 of the Agreement, Collective Bargaining Agreement (CBA) labor costs (i.e., wages, health and welfare, and pension costs) for RY17 shall be determined by adjusting allowable CBA labor costs from the most-recently completed fiscal year, determined in accordance with Section 4.2 by the procedures described in the then-current CBA, for the two year period from the most-recently completed fiscal year to the coming Rate Year (RY17). In addition, Attachment K, Section 4.3.1 states that RY17 wages and pension costs shall be capped at a 6.0% increase. Health and welfare costs are not capped.
In the Application, Recology adjusted the allowable CBA labor costs by applying the most recent weighted average increase in wages, health and welfare, and pension twice. This methodology does not align with the CBA increase methodology which is different each year nor does it align with the agreed-upon methodology during the last the CBRA methodology in 2022. In addition, Recology’s application did not cap the increase in wages and pension costs at
6.0%.
HF&H reprojected the RY17 CBA labor costs using the actual historical CBA increases and the projected CBA increases beginning November 2025 to increase the allowable CBA labor costs in accordance with the CBA’s methodology. This process included weighting the CBA increases based on timing of the annual increases (The CBA timeline is from November to October while the Rate Year is January to December).
The reprojected wages and pension costs exceeded the 6% cap by $106,710. The reprojected health and welfare costs were $9,275 lower than Recology’s projections. As such, we recommend decreasing CBA labor costs by $115,985 (Table 3, Row 1)
b. Non-CBA Labor Costs: Per Attachment K, Section 4.3.2, labor costs for personnel who are not governed by a CBA shall be projected based on the allowable non-CBA labor costs from the previous fiscal year multiplied by one plus the annual percentage change in the CPI-W (Urban Wage Earners CPI published by the Bureau of Labor Statistics) and multiplying the result by the change in the CPI-W again. In the Application, Recology projected non-CBA labor costs using the correct methodology. Therefore, no adjustment is recommended (Table 3, Row 2).
c. Workers Compensation: Per Attachment K, Section 4.3.3, workers compensation costs shall be projected based on the allowable workers compensation costs from the previous fiscal year multiplied by one plus the annual percentage change in the CPI-U (All Urban Consumers CPI published by the Bureau of Labor Statistics) and multiplying the result by the change in the CPI-U again. In the Application, Recology projected workers compensation costs using
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the correct methodology. Therefore, no adjustment is recommended (Table 3, Row 3).
d. Payroll Taxes: Recology’s Application properly calculated the payroll expenses related to the CBA and Non-CBA labor costs included in their Application; however, based on the recommended reduction in allowable RY17 CBA labor costs described in 1.a above, the payroll taxes included in the Application are overstated.
Therefore, we recommend reducing payroll taxes by $6,650 (Table 3, Row 4) to account for the lower reprojection of allowable labor costs. e. Vehicle-Related Costs: Per Attachment K, Section 4.3.5 of the Agreement states that projected vehicle-related costs for the coming rate year shall equal the allowable vehicle-related cost from the previous fiscal multiplied by one plus the annual percentage change in the MVI (Motor Vehicle Maintenance and Repair Index published by the Bureau of Labor Statistics) and multiplying the result by the change in the MVI again. In the Application, Recology projected vehicle-related costs using the correct methodology. Therefore, no adjustment is recommended (Table 3, Row 5).
f. Fuel Costs & Reconciliation: Per Attachment K, Section 3.3.7 of the Agreement states that projected fuel costs for the coming rate year shall equal the allowable fuel costs from the most-recently completed fiscal year multiplied by one plus the annual percentage change in the Producer Price Index – Fuel Pricing Index, published by the Bureau of Labor Statistics (PPI) and multiplying the result by the change in the PPI again, to project the costs for RY17. In addition, due to the volatility of fuel prices, Section 3.3.8 of Attachment K provides for a reconciliation of actual fuel costs to the projected fuel costs (which is the basis for Recology’s compensation) once actual fuel costs are known. Due to the volatility of fuel prices, this reconciliation assures Recology is neither over nor undercompensated for actual fuel prices during the term of the Agreement, and in turn assures ratepayers are not over or under charged.
Upon review, we found Recology’s Application correctly used the allowable fuel costs from the most-recently completed fiscal year (October 2023 through September 2024); however, they did not apply the annual change in the PPI in accordance with the Agreement. When discussed, Recology stated their rationale for the change was due to the 18% reduction in the PPI (which is applied twice, thus reducing fuel costs by more than 36%) is not reflective of current fuel prices and would result in undercompensating Recology in RY17. This would benefit ratepayers in the short term; however, once RY17 is completed and fuel costs are reconciled based on actuals, this would result in a significant impact to rates in future years to make Recology whole when the reconciliation is done.
To reduce ratepayer impact we recommend using the most recent 12 months of actual fuel costs adjusted by the change in CPI (Table 3, Row 7). Recology agreed with this approach of reprojecting RY17 fuel costs.
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Based on the revised fuel projection methodology, we recommend reducing Recology’s RY17 fuel costs by $33,634 (Table 3, Row 6).
Note: To assist with the City and Recology’s goal to mitigate the variability of fuel prices, HF&H also recommends conducting fuel reconciliations annually, instead of only during CBRA years.
g. Organics Processing (includes Transfer/Transport Costs): Per Attachment K, Section 4.3 of the Agreement states that organics processing costs shall equal (i) the base component of the organics transfer, transport, and processing fee for the current Rate Year, which totals to $96.87 for 2025, multiplied by one plus the annual percentage change in the CPI-U plus the sum of the then-current (or known future) regulatory fees, multiplied by (ii) the total tons of organic materials collected for the most-recently completed 12-month period ending April 30.
Recology currently takes residential organic material and commercial organic material to different facilities; the Application separated out the organic tonnage by customer class and applied the applicable per ton rate to each; therefore, no adjustments are recommended to organics processing costs (Table 3, Row 8). h. Lease Costs: Per Attachment K, Section 4.3.12 of the Agreement states that lease costs shall be fixed for all years during the Agreement, unless adjusted by deleting from the schedule vehicles and equipment no longer in use and adding to the schedule new and replacement vehicles and equipment approved by City in connection with City’s consideration of Recology’s Application during CBRA.
HF&H reviewed Recology’s lease schedule for January 1, 2026, and noted an increase in lease cost associated with additional vehicles, vehicles parts, building repairs, carts, bins, and boxes. HF&H reviewed the data and noted Recology properly deleted old vehicles and equipment no longer in use and added new vehicles and equipment necessary to provide services as directed in the Agreement. The additional costs are reasonable; therefore, no adjustment is recommended (Table 3, Row 9).
i. Other Costs: Per the Agreement, other costs (e.g., insurance, utilities, billing, safety meetings, corporate overhead) for the coming rate year shall equal allowable other costs from the most-recently completed fiscal year, determined in accordance with Section 4.2 of Attachment K multiplied by the annual percentage change in CPI-U and multiplied by the annual percentage change in CPI-U again.
Per Attachment K, Section 4.2.2 in the Agreement, the following items are disallowed other costs for the most-recently completed fiscal year, including, but are not limited to: other costs associated with providing service to non-City customers; charitable or political donations in any amount; travel and entertainment expense in excess of $5,000 annually; citations and penalties; corporate overhead in excess of 5.7% the annual cost of operations; and bad debt expenses in excess of 3% of gross receipts. Upon review, we found Recology properly removed all non-allowable costs, with the exception of:
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i. “Other Costs” for Providing Service to Non-City Customers. Upon review we found Recology under allocated other costs to non-City customers, which resulted in an over allocation to the City. Recology provides service to City and non-City customers. Other costs are apportioned to the City based on their proportional share of households served.
Recology’s Application allocated 74.3% of other costs to the City. Based on our review, we found only 74.2% of households served by Recology are in the City.
ii. Excess Travel and Entertainment. Upon auditing invoices for costs included in the Application, we found that Recology mistakenly included $5,745 in travel and entertainment expenses, exceeding the $5,000 cap. iii. Citations and Penalties. Upon an audit of invoices for costs included in the Application, we found Recology mistakenly included $45 citation.
Based on the adjustments recommended above, HF&H recommends a net decrease of $2,730 to Other Costs (Table 3, Row 10).
2. Profit: We found that Recology calculated profit in accordance with procedures described in the Agreement. However, due to the proposed adjustments described herein, HF&H recommends a net increase of $17,667 (Table 3, Row 12) to Recology’s calculated profit.
3. Pass-Through Costs: HF&H recommends a net decrease of $17,181 (Table 3, Row 17) to Recology’s allowable Pass-through Costs, due to the following:
a. Recyclable Materials Processing Costs (includes Transfer/Transport): For RY17, the cost to process recyclable materials is calculated based on total tons of recyclable materials collected for the most recently completed 12-month period ending April 30. Per the Agreement, the calculated tonnage is multiplied by two fees as applicable: 1) the recyclable transfer cost per ton to cover costs related to receipt of materials in collection vehicles and loading such materials into long-haul transfer vehicles, (per Attachment K Section 4.6.2); and, 2) the recyclable transport fee per ton, for transportation of recyclable materials from the designated transfer facility to the designated processing facility (per Attachment K Section 4.6.3).
HF&H reviewed recycling tonnage for the 12-month period by requesting detailed supporting documentation (monthly reports, monthly weight tags, etc.) for four months to validate the recycling material collected was from the City and was accurately included in the Application. For two months, HF&H found a slight variance in the reported volume of recycling tonnage transferred when compared to the supporting documentation, which resulted in overstating of recycling tons in the Application. HF&H adjusted the total recyclable tons in the Application from 4,642.58 to 4,513.17 to agree to supporting documentation.
HF&H recalculated the recycling transfer, transport and processing fee and recommends a decrease of $8,148 (Table 3, Row 13) to the RY17 Recology costs to reflect this adjustment.
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b. Solid Waste Disposal: In accordance with Attachment K, disposal costs for RY17 should equal the agreed-upon per-ton disposal fee at the designated disposal facility (currently Ox Mountain Landfill) multiplied by the total tons of solid waste collected for the most recently completed 12-month period ending April 30. The total per-ton tipping fee to dispose of solid waste at Ox Mountain Landfill is currently $71.07. The disposal fee is made up of four components: 1) the base fee; 2) HHW/LEA fee; 3) a solid waste management and diversion fee; and 4) an AB 1220 fee. The base fee is adjusted by the change in the CPI-U.
HF&H reviewed solid waste tonnage for the 12-month period by requesting detailed supporting documentation (monthly reports, monthly weight tags, etc.) for four months to validate the solid waste tonnage disposed of was from the City and was accurately included in the Application. All four months’ supporting documentation agreed to the tonnage included in the Application. However, Recology did not use the current base tipping fee in the Application to project the RY17 base fee but instead used an estimated number that was higher than the actual base fee.
HF&H corrected the calculation of the RY17 solid waste per ton fee by using the current base fee to project the RY17 base fee and recommends a decrease of $6,647 (Table 3, Row 14) to reflect the revised disposal costs calculation. c. Construction & Demolition Processing (includes Transfer/Transport):
Based on Attachment K, C&D processing costs for RY17 should equal the agreedupon per-cubic yard and per-ton processing fees at the designated processing facilities, Ox Mountain Landfill and Blue Line Transfer Station, respectively, multiplied by the total volume (tons or cubic yards) of C&D material collected and transported to the respective facility, for the most recently completed 12-month period ending April 30.
HF&H reviewed the invoices from the Ox Mountain Landfill and noted the volume of material brought to the Ox Mountain Landfill was overstated in the Application.
In addition, the per-cubic yard tip fee was understated. The net impact of correcting Recology’s calculation results in a net decrease to the Ox Mountain C&D processing costs of $2,387 (Table 3, Row 15).
HF&H reviewed the invoices from the Blue Line Transfer Station and noted the volume of material and the respective per-ton tip fee were properly used in the Application; therefore, no adjustment is necessary (Table 3, Row 16).
4. City Fees: In accordance with Sections 10.02 and 10.03 and Attachment M of the Agreement, City fees (franchise fees, franchise administrative services fees, Frontierland Park remediation fee, AB 939 Fees, and vehicle impact fee) are adjusted annually by the percentage change in the CPI-U, with the exception that franchise fees are held constant at $200,000. Recology properly calculated the RY17 City fees; therefore, no adjustment is necessary (Table 3, Row 18).
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5. Total Calculated Costs: Total calculated costs shall be the sum of total annual cost of operations, profit, pass-through costs, and City fees, as calculated above (Table 3, Row 19).
Projected Revenue at Current Rates
Recology’s Application projected revenue at current rates to be $12,249,330 by using the actual revenue for the 12 months ending April 30, 2025 ($11,853,975), adjusted to reflect the most recent rate adjustment effective January 2025 (a 5.09% increase). Our review of the reasonableness of Recology’s projected revenues involved: 1) requesting the most recent subscription and billing data; 2) building up annual revenue by multiplying current rates by subscription; and 3) testing billing of specific customer accounts. Based on the procedures performed, we propose no change to Recology’s projected revenue at current rates used to calculate the RY17 rate adjustment factor (Table 3, Row 20).
IV. Rate Adjustment Factor
Attachment K, Section 4.8 of the Agreement states that the rate adjustment factor shall equal the total calculated costs for the coming rate year (RY17) divided by projected revenue at current rates.
After the application of the adjustments described in this report, HF&H calculated a rate adjustment factor of 2.94%.
* * * * *
We would like to express our appreciation to Recology’s management and staff for their assistance. In addition, we express our appreciation to you for your assistance and guidance during the course of the review. Should you have any questions, please contact me directly at (925) 977-6957 or [email protected].
Very truly yours,
HF&H CONSULTANTS, LLC
Rick Simonson
Senior Vice President
cc: Roland Yip, City of Pacifica
Louis Sun, City of Pacifica
Carl Mennie, Recology
Rich Lanser, Recology
Aparna Dhatrak, Recology
HF&H Client Files
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Packet Pg. 304 Attachment: Attachment 1 - Pacifica RY17 CBRA 10.20.25 [Revision 1] (6054 : Resolution - Adopt Resolution Confirming 2026 Recology Rate 2026
2025 Adjustment 2026
Rates Factor Rates
Single-Family Residential Service
One time additional 32 gallon bag $11.32 2.94% $11.65
Each additional gallon over 32 per pick up $1.98 2.94% $2.04 Mini can 20 gallons or less (20 gallon can) $32.46 2.94% $33.41 32 gallon Cart $50.11 2.94% $51.58
48 gallon Cart $74.50 2.94% $76.69
64 gallon Cart $98.95 2.94% $101.86
96 gallon Cart (acknowledged by City) $147.78 2.94% $152.12 Extra Recycling Cart $4.61 2.94% $4.75
Extra Organic Materials Cart $4.61 2.94% $4.75
Residential service rates are for solid waste container sizes and include costs for recyclables and organics materials collection service.
Commmercial Solid Waste Bin Collection Service
Commercial container rentals
1 cubic yard $84.91 2.94% $87.41
2 cubic yards $99.03 2.94% $101.94
Commercial container pick up for Solid Waste
1 cubic yard $77.85 2.94% $80.14
2 cubic yards $113.22 2.94% $116.55
Compacted commercial container pick up for Solid Waste
1 cubic yard $114.60 2.94% $117.97
2 cubic yards $197.03 2.94% $202.82
Commercial container pick up for Organics
1 cubic yard $127.35 2.94% $131.09
2 cubic yards $218.89 2.94% $225.33
Commmercial Can/Cart Solid Waste Pick Up
Each additional gallon over 32 $2.88 2.94% $2.96
32 gallon Cart $56.59 2.94% $58.25
48 gallon Cart $84.85 2.94% $87.34
64 gallon Cart $107.15 2.94% $110.30
96 gallon Cart $169.72 2.94% $174.71
Commmercial Can/Cart Organics Pick Up
32 gallon Cart $50.93 2.94% $52.43
48 gallon Cart $76.38 2.94% $78.63
64 gallon Cart $101.84 2.94% $104.83
96 gallon Cart $152.77 2.94% $157.26
ATTACHMENT A - 2026 RATES
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2025 Adjustment 2026
Rates Factor Rates
Debris Box Solid Waste Debris Collection
14 yard container (7 days) $718.75 2.94% $739.88
Each additional day $59.03 2.94% $60.77
20 yard container (7 days) $926.00 2.94% $953.22
Each additional day $82.88 2.94% $85.32
Debris Box Construction and Demolition Debris Collection 9 yard container (7 days) - clean fill only $848.19
Each additional day $70.21
15 yard container (7 days) - Max. Weight 2 tons $783.00 Each additional day $70.21
Excess weight charge (per ton) $200.21
20 yard container (7 days) - Max. Weight 3 tons $983.21 Each additional day $70.21
Excess weight charge (per ton) $200.21
30 yard container (7 days) - Max. Weight 5 tons $1,383.63 Each additional day $70.21
Excess weight charge (per ton) $200.21
40 yard container (7 days) - Max. Weight 7 tons $1,784.05 Each additional day $70.21
Excess weight charge (per ton) $200.21
Miscellaneous Single-Family Services
Service from side or rear of house $8.25 2.94% $8.49
Return pick up charge $14.27 2.94% $14.69
Special call for large items
charge by
volume
charge by
volume
Extra charge for collection private driveways:
1 to 30 feet no charge no charge
Over 30 feet (for every 10 feet or part thereof) $8.25 2.94% $8.49 Life line rates (available only for 20 gallon Cart Customers) $30.48 2.94% $31.38 Single Family return trip charge (i.e. provision $23.10 2.94% $23.78 of collection service after the regularly
scheduled collection day) per event
Miscellaneous Commercial and Multi-Family Services
Recycling services provided to commercial and no charge no charge multi-family customers
Distance charge for MFD and commercial
accounts for container size of 3 cubic yards or less:
Within fifty (50) feet of access by Contractor's collection no charge no charge vehicle
51 feet or more from access by Contractor's no charge no charge collection vehicle
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Packet Pg. 306 Attachment: Attachment 1 - Pacifica RY17 CBRA 10.20.25 [Revision 1] (6054 : Resolution - Adopt Resolution Confirming 2026 Recology Rate 2026
2025 Adjustment 2026
Rates Factor Rates
Distance charge for MFD and commercial
accounts for container size larger than 3 cubic yards
or less:
0 to fifty (50) feet of access by Contractor's collection no charge no charge vehicle
51 feet or more from access by Contractor's no charge no charge collection vehicle
Extra pick up charge for MFD and commercial
charge by
volume
charge by
volume
customers (charge per collection event)
Lock purchase fee (one time charge; replacement at $26.19 2.94% $26.96 no additional charge)
Key service (unlock and relock bin). Monthly charge $14.63 2.94% $15.06 based on once per week service
Container steam cleaning (or clean container exchange) $130.92 2.94% $134.77 Bin or debris box
Fee to collect contaminated Targeted Recyclable $32.91 2.94% $33.88 Materials or Organic Materials (per container)
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CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
11/24/2025
1 SUBJECT:
Guiding Framework of Parameters and Principles for the 2212 Beach Boulevard Site Request for Qualifications/Proposals (RFQ/P)
RECOMMENDED ACTION:
Receive a presentation on guiding framework and key principles for potential development of the 2212 Beach Boulevard site, provide direction to the City Manager on the preferred parameters and expectations to be incorporated into the forthcoming RFQ/P, consider forming a Council Ad Hoc Subcommittee to engage at key milestones in the solicitation process and, if Council elects to do so, appoint its members; and authorize staff to prepare and issue an RFQ/P to solicit development proposals for the site.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 738-7402
[email protected]
INTRODUCTION:
The 2212 Beach Boulevard site (“Site”) is a key City-owned oceanfront property identified in the City’s Strategic Plan and Economic Opportunities Study as a priority redevelopment opportunity.
With the Site now eligible to be marketed for private development after completing the Surplus Lands Act process, the City Manager is seeking Council direction on a guiding framework and key principles to shape a Request for Qualifications/Proposals (RFQ/P) for the Site. The City has contracted with Kosmont Companies for assistance throughout this process.
Based on previous and continuing City Council direction, the City Manager recommends moving forward with a hotel-focused solicitation that aligns with the Site’s waterfront setting, supports downtown development, and advances long-term strategic priorities and fiscal objectives. The proposed framework outlines the intended solicitation approach and evaluation criteria and will guide preparation of the RFQ/P and subsequent developer outreach.
BACKGROUND:
The City has been pursuing redevelopment of the 3.5-acre City-owned site parcels at 2212 Beach Boulevard (“Site”) for decades, after the City relocated the former wastewater treatment plant in 2000. The property underwent significant preparation following the plant’s closure, including soils and groundwater investigations, removal of underground tanks, environmental review, and concept planning for future development. These activities positioned the site for marketing. As with all development solicitations, the past site activities and any necessary new site activities will be addressed during the due diligence phase of property negotiations. 2016-2018 RFQ/RFP Efforts
In 2016, the City issued a two-step RFQ/RFP for a mixed-use development comprising a hotel, 11 Packet Pg. 308
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restaurant/retail, housing, and a public library. Several developers submitted qualifications, and one development team was selected for negotiations in 2017.
During this period, progress on the project became tied to the possibility of locating a new City library on a portion of the site. The November 2017 library funding measure received majority support but did not achieve the required two-thirds voter approval. As a result, the City revisited potential library location options while simultaneously attempting to negotiate project terms.
Ultimately, the combination of unresolved library siting decisions, coupled with the complexities of designing a shared hotel, library development footprint and the parties’ inability to reach agreement on key deal terms, led the City and the developer to mutually discontinue ENA negotiations.
In early 2018, after determining that the library would no longer be included on the Site, the City reconsidered the development strategy. Staff recommended, and the Council approved, a refreshed RFQ/RFP focused on a whole-site (while retaining the existing pump station in place), waterfront hotel concept to maximize competitiveness, visitor-serving activities, and secure long-term fiscal benefits such as transient occupancy tax (TOT), property tax revenue, and Palmetto downtown corridor revitalization. Despite progress on the revised strategy, the City received only one proposal, which was ultimately determined to be infeasible. As a result, the parties did not enter into an ENA, and the process concluded without moving forward to the entitlement or disposition phases.
Project Pause Following 2018 Effort and COVID-19
Following an unsuccessful solicitation in 2018 that resulted in only one proposal that was deemed unviable, the City planned to conduct a hotel market study and reinitiate the RFQ/RFP process; however, the COVID-19 pandemic halted this plan. Market volatility, severe uncertainty in the hospitality sector, and constraints on staffing and resources made it impossible to continue active solicitation for a developer partner. As a result, the Beach Boulevard project was placed on hold during the COVID period.
In addition, the City was engaged in numerous major projects that would ultimately help the future marketing of the site, including a comprehensive General Plan Update, a comprehensive Local Coastal Land Use Plan, the Sharp Park Specific Plan, and wastewater pump station improvements.
Post-COVID Reconsideration of the Site
After the pandemic, the City restarted comprehensive economic development planning efforts.
The 2212 Beach Boulevard site was re-evaluated as part of:
• 2023 Economic Opportunities Study (EOS):
The EOS, conducted by Kosmont Companies, identified the Site as Pacifica’s most significant near-term economic development opportunity. Key findings emphasized the Site’s rare oceanfront location, hotel market viability, ability to anchor the Palmetto Avenue commercial corridor, and strong revenue-generating potential. The Study reaffirmed a hotelfocused implementation strategy and recommended advancing the project once Surplus Land Act compliance was complete.
• 2023-2030 Citywide Strategic Plan:
The Plan includes redevelopment of 2212 Beach Blvd as a core initiative under “Economic 11 Packet Pg. 309
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Vitality” and “City Revenue Sustainability.” It calls for completing the SLA process, preparing development solicitation materials, and re-engaging the market through a structured RFQ/P process based on clear guiding principles and community goals.
Completion of the Surplus Land Act (SLA) Process
Earlier this year, staff conducted and completed the State-mandated Surplus Land Act (SLA) process, which is required before a local agency may sell or lease publicly owned land for private development. The SLA compliance included:
• Formally declaring the Site “surplus property.”
• Issuing the Notice of Availability (NOA) to required affordable housing entities. • Allowing the required 60-day window for interested developers to express interest. • Conducting good-faith negotiations, if applicable.
• Obtaining final clearance from the California Department of Housing and Community Development (HCD).
No affordable housing proposal advanced through the SLA negotiation phase. With HCD’s clearance now in hand, the City is legally authorized to market the Site, issue an RFQ/P, and advance toward disposition and development of the Site. With the Site identified in the City’s adopted Strategic Plan as a key economic development strategy, the City is now ready to reinitiate a competitive developer solicitation process.
To ensure clarity, market viability, and alignment with the City’s strategic objectives and community values, the City Manager recommends the Council establish a guiding framework and principles for the forthcoming RFQ/P. These parameters will form the basis of the solicitation document, ensure transparency, and provide consistent expectations for potential developers as the City moves forward to market the site and solicit qualified developer interest for the 2212 Beach Boulevard project.
DISCUSSION:
To support the City in advancing the redevelopment of the 2212 Beach Boulevard site, staff retained Kosmont Companies, a firm specializing in municipal real estate advisory services, hotel market analysis, public-private transactions, developer solicitation, and negotiation support.
Under this engagement, Kosmont is assisting the City with:
• market positioning of the Site, including hotel market analysis; • preparation of the RFQ/P tailored to current industry conditions; • strategic outreach to qualified hotel developers, operators, and brands; • evaluation of developer submittals; and
• supporting ENA negotiation and fiscal analysis.
Once the Council provides the direction to proceed, City staff and Kosmont will finalize the RFQ/P package, prepare a targeted distribution list of qualified hotel developers and brands, and release the solicitation for a recommended 30-45 day posting period. During the posting window, staff and Kosmont will maintain a single point of contact for all inquiries, post addenda as needed, and track interest from prospective respondents. 11 Packet Pg. 310
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Upon receipt of responses, all submissions will be thoroughly reviewed and evaluated against the established qualifications and RFQ/P criteria. Staff and Kosmont will establish a shortlist of the most qualified development teams, conduct interviews and site tours, and request refined proposals / term sheets from finalists for Council’s consideration of a preferred developer.
Upon Council selection of a preferred development team, staff, working closely with Kosmont and the City Attorney, will initiate negotiations for an Exclusive Negotiating Agreement (ENA) to establish roles, responsibilities, performance milestones, financial terms, due diligence requirements, and the path toward a future Disposition and Development Agreement (DDA).
Consistent with lessons from 2018 solicitation process and current market conditions and Council priorities, City Manager recommends that the RFQ/P emphasize a whole-site, hotelfocused uses and avoid any encumbrances that would reduce the hotel footprint or add substantial entitlement complexity, while allowing proposers to describe any complementary visitor-serving elements if they strengthen the overall project and hotel business case.
Request for Qualifications (RFQ)
The RFQ phase is intended to identify development teams with the experience, financial capacity, and technical capability to successfully execute a high-quality, coastal hotel project on a complex, high-visibility site. Screening criteria for qualified developers may include the following:
• Demonstrated financial capacity and prior hotel development experience, including equity/debt structures, successful delivery of comparable projects, and experience with public-partner transactions and ENA and DDA negotiations with public agencies in California.
• Track record of developing coastal or destination/main-street hotels with reputable brands/operators and high-quality architecture, design, and engineering teams. • Experience navigating multi-jurisdictional entitlements, including City land-use review, Local Coastal Program policies, and California Coastal Commission requirements, as well as experience managing complex permitting, compliance, and enforcement environments.
• History of long-term hotel ownership and operations, robust community engagement, and constructive partnerships in other jurisdictions.
• Clear statement of vision for the Site, including how the proposed team views the Site’s potential and its role in downtown Pacifica’s economy and visitor-service industry.
Request for Proposals (RFP)
Shortlisted teams will be invited to submit detailed proposals, including purchase terms and conditions. RFP evaluation will focus on the quality, feasibility, and alignment of proposals with the City’s strategic goals for placemaking, economic development, and long-term fiscal resilience.
Evaluation Criteria may include the following:
• Program & Placemaking: Evidence the hotel is designed as a destination property that leverages the oceanfront, pier / promenade, Coastal Trail, Sharp Park Golf Course, and Palmetto commercial corridor. Strong proposals will incorporate activated food and beverage spaces, visible public-realm edges, and right-sized meeting and social space. • Design & Site Plan: Preliminary site and floor plans, massing/elevations, room count, amenities, restaurant, meeting space and potential retail along Palmetto Ave (if applicable), quality of furnishings / fixtures, and a parking plan that may include the treatment or replacement of existing public spaces and supports downtown operations. 11 Packet Pg. 311
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• Brand/Operator & Quality: Identification of the intended hotel brand or operator tier, the list of potential hotel brands/operators that will be solicited, and the anticipated quality, service level and price positioning suitable for a waterfront setting. • Resilience & Coastal Interface: Demonstrated understanding of sea-level rise, coastal hazards, shoreline dynamics, and feasible design strategies that are consistent with City policies, the Local Coastal Program, and Coastal Commission requirements. • Financials & Schedule: Realistic hotel development pro forma (land economics, construction costs), and hotel operating pro forma (market assumptions, rate of returns), proposed land purchase price or ground lease terms, and a realistic proposed development schedule with key milestones.
• City Cost Recovery: Provision of an ENA deposit sufficient to cover City’s legal and consultant costs, associated with ENA preparation and negotiation, with reconciliation at ENA execution and augmentation if needed
Council Ad Hoc Subcommittee Role
If the Council chooses to establish an Ad Hoc Subcommittee, its purpose would be to provide focused, high-level input at a few critical milestones in the RFQ/P process while staff and Kosmont continue to lead all technical evaluations and negotiations over the next 6-8 months.
The subcommittee would serve in an advisory capacity only, ensuring alignment with Council priorities prior to items returning for full Council consideration.
If formed, the subcommittee’s involvement would be limited to these key touchpoints:
• Prospective Developer Interviews:
Following consultant and staff completion of its technical evaluation of RFQ responses and development of a shortlist of top respondents, the subcommittee would participate in interviews with those developers to gain early insight into qualifications and concepts before proposals advance to the next phase.
• Discussion of RFP Results and Term Sheets:
As the leading shortlisted developers submit proposals and preliminary term sheets, the subcommittee would be briefed on the technical evaluation and engaged in a high-level discussion of project feasibility, alignment with City strategic objectives, to provide input on key issues requiring Council direction.
• Preferred Developer Recommendation:
Prior to bringing forward a preferred developer for full Council consideration, the subcommittee would work with the consultant and staff to review the evaluation outcome, assess alignment with Council-established parameters, and help shape the recommendation by identifying the developer team best positioned to advance to Exclusive Negotiating Agreement (ENA) negotiations.
Staff could convene the subcommittee as needed at these specific milestones or related intermediate steps, and the group would not be expected to meet on a standing or recurring schedule.
ALTERNATIVE ACTION:
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The City Council may choose to delay consideration of the guiding framework and RFQ/P parameters. Deferring action would postpone issuance of the RFQ/P and delay the City’s ability to actively market the Site to qualified developers.
Alternatively, the Council may provide additional direction to modify, expand, or refine components of the guiding framework, RFQ/P criteria, or development strategy.
Council may also elect not to move forward with an RFQ/P at this time; however, this would halt progress on marketing the Site, delay potential economic development and revenue opportunities, and be inconsistent with adopted Strategic Plan priorities.
RELATION TO CITY GOALS AND WORK PLAN:
Redevelopment of the 2212 Beach Boulevard site directly advances the City’s adopted Strategic Plan and Economic Opportunities Study recommendations, both of which identify the Site as a priority economic development opportunity. Issuing an RFQ/P supports goals related to economic vitality, fiscal sustainability, downtown revitalization, and strategic use of City-owned property.
FISCAL IMPACT:
There is no immediate fiscal impact, as the consulting work has been included in the FY 2025- 26 Budget. Preparation and issuance of the RFQ/P will require staff time and limited consultant and legal support, which can be accommodated within existing Economic Development resources and budget allocation. The shortlisted respondents will be required to provide an ENA cost-recovery deposit, and the selected developer will be expected to reimburse the City’s legal and consultant costs associated with ENA and DDA negotiations. The long-term financial impact is to be determined at a later stage on this process.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
11 Packet Pg. 313
CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
11/24/2025
1 SUBJECT:
Continuation of discussion following the November 10, 2025, Council Study Session on Revenue Generation Opportunities and Pacifica’s Financial Sustainability Challenges RECOMMENDED ACTION:
Continue discussion from the adjourned Council Study Session on Pacifica’s financial sustainability challenges and revenue generation opportunities held on November 10, 2025.
Provide further direction to the City Manager as needed on options 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]
Yulia Carter, Assistant City Manager
(650) 738- 7402
[email protected]
BACKGROUND:
On November 10, 2025, the City Council held a Study Session to review and discuss Pacifica’s long-term financial sustainability challenges. The purpose of the session was to establish a clear fiscal baseline on government revenues, where structural gaps exist, and what tools and strategies may help the City strengthen and diversify its revenue base. The session also provided an overview of revenue performance, staffing and service-level impacts, capital funding gaps, economic development opportunities, and other potential long-term solutions.
The full staff report and attachments from that Study Session are available here:
https://pacificacityca.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=1614&Inline=True.
A staff presentation (Attachment 1) accompanied the report and provided additional visuals to illustrate the financial trends and options discussed. This conversation focused on revenue options-not expenditure evaluation or organizational restructuring-which will be addressed later through the budget process.
Direction given at the November 10, 2025 Council Study Session:
The Council directed the City Manager to assess the feasibility of a parcel tax with a public safety focus, as well as assess the feasibility of an infrastructure measure for roads, for future Council consideration whether to place a revenue measure on the November 2026 ballot. In addition, the Council directed staff to engage professional expertise to support community education, outreach, and public opinion polling related to these potential revenue measures to help the Council and community better understand the level of support for various options. 12 Packet Pg. 314
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During the Study Session, the Council also expressed interest in seeing additional background information, such as a timeline for planning a November 2026 ballot measure, a simplified comparison of revenue options, further explanation of Community Facilities Districts (CFDs), and clarification of the City’s debt limit. Staff will share as much information as feasible during the meeting, noting the brief time between the two meetings.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation Opportunities and Pacifica’s Financial Sustainability Challenges (November 10, 2025) (PDF) 12 Packet Pg. 315
City Council Meeting
November 10, 2025
Pacifica’s Financial
Sustainability Challenges
& Revenue Generation
Opportunities
Kevin Woodhouse, City ManagerYulia Carter, Assistant City ManagerMarisol Gómez, Director of FASD Brian Moura, Consultant, RGS
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
COUNCIL
STUDY
SESSION
OBJECTIVES
¾Establish a Shared Understanding of
Pacifica’s Fiscal Sustainability Challenges
¾Identify Structural Gaps and Explore
Potential Revenue Generation Strategies
¾Provide direction to the City Manager
regarding potential voter-approved revenue measures for further feasibility assessment 2 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation AGENDA
INTRODUCTION1. Budget Challenges2. Lessons from Thriving San Mateo County Cities3. Pathways Toward Fiscal Sustainability A. Revenue Strategies Currently UnderwayB. Economic Opportunity SitesC. Housing DevelopmentD. Potential Revenue Measures – General FundE. Potential Revenue Measures – Capital Needs
4. Council Direction & Next Steps
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation Current Revenues Do NOT keep
pace with the cost of maintaining existing service levels.
Lower Staffing and Compensation Remain on average 10-20% below market, limiting service capacityOver $370M in unfunded projects, plus coastal climate accelerates deterioration, and each year of delay increases costs by 8-10% WHY WE ARE HERE:
LAYERS OF FISCAL CHALLENGES
Pacifica’s Fiscal Challenges are NOT One-Dimensional -They are Complex and Structural Complex Challenges Require Comprehensive, Strategic & Multi-Layered Solutions $15.4 M Operating Needs
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation SECTION 1:
BUDGET CHALLENGES:
UNDERSTANDING THE STRUCTURAL GAP
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
GENERAL FUND
DEFICIT
• 2025-26 Adopted Budget:
¾ Projected $42,109 positive balance¾ Only 2/3 of the VLF In-lieu backfill was funded, resulting in a $0.7M. revenue reduction
¾ The gap to be funded by General Fund
Reserves per Budget Strategy #2
• 10-Yr Long-Term Financial Forecast:
¾ Structural deficit peaks at $6.6M in Year 4¾ Baseline level of services, no enhancements • Upcoming Budget Challenges
¾ Balancing Future Budgets Require Both Cost
Control & New Revenue
Long-Term Structural Gap
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation FY 2026-27 PROJECTED DEFICIT
$3.1 MIL NEEDS ACTION
What $3.1 million in reductions could look like by Department and Staffing Department Est Reduction
Police -786,199
General Gov -506,743Fire -495,138PB&R -422,806Non-Dept -300,483 Public Works (Gen Fund) -299,256
Comm Dev -284,208
Total Est Reductions -$3,094,833
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
UNASSIGNED
GENERAL FUND
BALANCE
• GFOA Recommendation
• Two months of General Fund
expenditures
• Equivalent to $8.8 million or 16.7%
of the current budget
• Future Projections
• Unaddressed structural budget
deficit would deplete unassigned reserves by FY29
• LTFF detailed assumptions in
Attachment A
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation GENERAL FUND REVENUES DEFINE ORGANIZATIONAL CAPACITY:
STRONG REVENUES BUILD STRONG TEAMS
Pacifica improved from 17% (2024)
ĺ 13.3% (2025) below peers
¾ Pacifica: 201 FTEs (2025) — still §)7(VVKRUW of peer cities¾ &RVWWRUHDFKSDULW\ §0DQQXDOO\ (conservative estimate)¾ 6WDIILQJUHPDLQVEHORZ6DQ0DWHR&RXQW\SHHUV
9 41% below Menlo Park9 32.5% below Burlingame9 23.5% below San Bruno9 5.5% below Foster City ¾ &RPSHQVDWLRQ*DS
Citywide pay ranges on average 10-20% below
PDUNHW
§$4-0QHHGHGWRUHDFKPDUNHWSDULW\(a moderate
estimate, given regional wage increases and fluid labor market trends) Pacifica continues to operate as a full-service City with fewer staff and lower revenues than its peers.
Investing in people AND revenue growth is critical to Pacifica’s long-term sustainability
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
UNFUNDED CAPITAL IMPROVEMENT PROJECTS
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation SECTION 2:
THE ECONOMICS OF THRIVING CITIES
LESSONS FROM NEIGHBORING CITIES
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation LEARNING FROM THRIVING CITIES:
STRONG REVENUES=BETTER QUALITY OF LIFE
F I S C A L G R OW T H OV E R 1 5 Y E A R S ( 2 0 1 0 - 2 0 2 5 ) •.
Long-term fiscal health through:• Balanced Housing, • Commercial Growth, and• Strategic Ec. Development Investment.
MENLO PARK
SAN CARLOS
BURLINGAME
Diversified economies create stronger, faster-growing revenue bases 12 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
HOUSING AND ECONOMIC GROWTH DRIVE FISCAL SUSTAINABILITY ¾ Burlingame, Menlo Park, and San Carlos grew populations, housing, and jobs, reinforcing economic vitality.¾ Every new home = development impact fees, property tax, local spending, and workforce stability.¾ Commercial and Mixed-use Developments = Diversified Revenues:
• Burlingame: Airport corridor expansion – hospitality, biotech, higher TOT from business travel. • Menlo Park: Bayfront redevelopment anchored by tech and life-science – higher assessed property value, added jobs, and daytime business activity).
• San Carlos: Innovation Zone - modern life-science and manufacturing hub, driving up property values and new business activity (jobs, bus. travel, etc).
• Pacifica: no new commercial growth, only 2% new housing units added over 15 years, population decline = limited fiscal capacity.
FY 2010–11 to FY 2024–25
CITY HOUSING
UNITS ADDED
POPULATION CHANGE
Menlo Park +1,190 (+9%) +3.8%
Burlingame +976 (+7%) +4.9%
San Carlos +390 (+3%) +4.4%
Sustained Growth = Stronger Revenues, Better Services, Higher Quality of Life Pacifica +334 (+2%) -4.4% 13 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
REVENUES GROWTH TRANSLATES INTO
QUALITY OF LIFE
Peer Cities Reinvest in Their Communities.Burlingame• Built $52.3M LEED-Gold Community Center (2022).• Advancing Downtown Town Square & Waterfront Redevelopment.• Expanded cultural, recreation, and senior programs.Menlo Park• Opened Belle Haven Community Campus (2024) – library, gym, youth & senior centers.
• Redeveloping SRI Campus and Bayfront area into mixed-use innovation hubs.
• 9 community facilities supporting year-round programs.San Carlos• Innovation District: $80M in community benefits, +$11.6M impact fees.• Investments in parks, youth, and citywide events (Hometown Days, Music in the Park).
• Vibrant Downtown with planned $125M investment (promenade, fountain, public restrooms, trees, outdoor dining)
Cities with diversified revenues have modern facilities, vibrant public spaces, and enhanced quality of life.
BURLINGAME
MENLO PARK
SAN CARLOS
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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SERVICE & INFRASTRUCTURE COMPARISONS
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation SECTION 3:
PATHWAYS TOWARD FISCAL SUSTAINABILITY
MOVING BEYOND SHORT-TERM FIXES TOWARD STRUCTURAL BALANCE 25 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
INTEGRATED FISCAL
SUSTAINABILITY FRAMEWORK:
BUILDING BLOCKS OF LONG-TERM FISCAL HEALTH
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
REVENUE STRATEGIES
CURRENTLY
UNDERWAY
,QLWLDWLYHV$OUHDG\LQ0RWLRQ
¾ 10-<HDU)LQDQFLDO)RUHFDVW guiding long-term revenue/expenditure trends.
¾ *UDQWSXUVXLWV (partner with Townsend + departments) for capital and operating programs.
¾ 7D[DQG)HH&RPSOLDQFH$XGLWV — business license, cannabis, UUT, and STR.
¾ &RVW5HFRYHU\
Updating Cost Allocation Plan, User Fee Schedule,
and Development Impact Fees to reflect true service costs ¾ 6PDOO%XVLQHVV6XSSRUW — local programs and initiatives to attract, retain, and grow businesses, while ensuring compliance. ¾ (FRQRPLF'HYHORSPHQW:RUNSODQto advance Strategic Plan priorities by revitalizing commercial areas, expanding housing and mixed-use opportunities, and positioning the City as a destination and a place to live, work, and invest. 27 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
DEVELOPMENT
IMPACT FEES
• Purpose of the Fee Study Project
• Ensure fees reflect the cost of
delivering services
• Comprehensive review of
development-related and citywide fees
• Importance of the Study
• Some fees have not been reviewed
in decades
• Adjust fees to reflect true costs of
infrastructure expansion
• Project also includes CAP and
Comprehensive Fee review
Project Progress
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation RECENT
DEVELOPMENT
PROJECT – 801
FASSLER
• Fiscal Impact
• Hard to estimate fiscal impact• FY 2025–26 budget does not assume new DIF revenue
• Revised fees could generate
meaningful on
• 801 Fassler Avenue (Pacifica Heights)
• 24-unit townhome project• $540,326 in one-time fees
• Including $333,313 in
Development Impact Fees
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
OPPORTUNITY
SITES
• (FRQRPLF2SSRUWXQLWLHV6WXG\
• Prepared by Kosmont Companies• Presented to City Council in March 2023• Outlined 30 potential economic development strategies • 3ULRULW\2SSRUWXQLW\6LWHV
• 8 priority sites = ~ $3.4M in Annual Revenues Potential (fiscal analysis updated to reflect TOT & sales tax increases)
• %HDFK%OYG3URSHUW\
• 3.5-acre coastal site• Top redevelopment opportunity for potential hotel & restaurant 30 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
HOUSING AS AN ECONOMIC DRIVER
HOUSING =ECONOMIC VITALITY
¾ Each new home generates construction jobs, development impact fees, new property tax, and local spending. ¾ 3DFLILFD
UHVLGHQWLDOSDUFHOVFRPPHUFLDOĺQDUURZVDOHVWD[EDVH ¾ Typical restaurant = $5–10 K sales tax/year; small retailers = $4–.ĺOLPLWHGLPSDFW6WUDWHJLFKRXVLQJH[SDQGV population, workforce, and consumer base.
¾ Pacifica’s RHNA target (1,892 new housing units) presents both the challenge and the opportunity to generate meaningful economic impact while fulfilling the City’s goal to be a more inclusive and sustainable community x 1,044 moderate-income and market-rate units, and 848 lower-income units x Total = 18.93% City share of AV = $4.00\HDU + DIF and broader econ. activity (construction jobs, local spending) + Number of housing units
ĺ market analysis whether or not open a new business.
+ New residents diversify economy and support economic vitality of neighborhoods, can increase market demands and improve retail, community amenities, etc.
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation DOES HOUSING STRAIN CITY FINANCES?
THE FACTS TELL A DIFFERENT STORY
¾New homes “pay their way” – assessed at full market value, generating higher property tax, and development impact fee revenue
¾Most City costs are fixed, not per unit, so additional residents rarely increase expenses proportionately
¾Strategic infill projects use existing infrastructure efficiency, lowering maintenance costs¾Community Facilities Districts (CFDs) can help fund infrastructure, maintenance, and certain public safety services in new developments, helping cities recover costs and enable projects. ¾Housing drives economic circulation – residents shop and dine locally, expanding sales tax rev.¾The real fiscal risk is stagnation, not growth. Limited housing leads to slower AV growth and aging infrastructure (as demonstrated above in comparison to other cities) 32 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
REVENUE MEASURES TO CONSIDER
Business License Tax (BLT)• The BLT is charged to anyone doing business in the city and funds city services.• Current rates range from $0.35 to $0.77 per $1,000 of gross receipts, generating $582,000 in revenue for the current fiscal year.
• A 2022 study by HdL Companies proposed three models for increasing BLT revenue
Utility User Tax (UUT)• The UUT is imposed on utility services like electricity, gas, and water, collected by utility companies and remitted to the city.• Rates range from 1% to 11% across the state, with over 150 cities imposing a UUT.
• Pacifica's current rate is 6.5% on
electricity and gas, estimated to generate $2.87 million in 2025-26. • A 2022 study by HdL Companies provided options for adjusting the UUT Parcel Tax• The parcel tax is a non-ad valorem
tax on property parcels, requiring a 2/3 vote at a general election. • Revenue is used for specific
purposes, with the highest potential yield among General Fund options. • Rate structure options include a
single tax rate per parcel, tax rate per building square foot, lot size, or units, and tax rate by land use Bus License Tax UUT Parcel Tax
Estimated Annual
Revenue Generation
$88,750 to
$490,070
$2.0 million to
$3.1million
Approx. $6.0 million
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
OTHER REVENUE MEASURES
General Obligation Bonds (G.O.
Bonds)
Funded by property tax based on
property value
Used for infrastructure and capital
projects
Requires 2/3 voter approval
Measure Q in San Bruno
$102 million bond for infrastructure
repairs
Financed by $30 per $100,000 of
assessed property value
Passed with 73% Yes vote
Other Financing Alternatives
Certificates of Participation (COPs)
Direct Bank Loans
Parcel Tax Secured Bonds
Example
Type of
Financing
G.O. Bonds COPs Direct Bank
Loans
Parcel Tax
Secured Bonds
Voter Approval 2/3 vote None None 2/3 voteUsage Infrastructure Infrastructure Infrastructure Infrastructure and Operating
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation WHY WE ARE HERE:
LAYERS OF FISCAL CHALLENGES
Pacifica’s Fiscal Challenges are NOT One-Dimensional -They are Complex and Structural Complex Challenges Require Solutions that are:9 Comprehensive 9 Strategic, and 9 Multi-Layered
$15.4 M Operating Needs $14.9M Revenue Options
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
COUNCIL DIRECTION
Staff Recommendations
1. Explore options to generate revenues to cover the operating deficit (approx. $6M) to maintain current level of service in Pacifica for voter consideration in November 2026
2. Council direction on which revenue options to explore - Parcel Tax, Business License Tax, Utility Users Tax.
3. Return to Council in the future to review Infrastructure needs and explore a bond + revenue measure to begin to address these needs at an election in 2028 or later. 36 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
ALTERNATIVES
Other Actions the Council Could Consider:
1. Explore revenue options to generate an additional $3.8 Million per year to add 25 full time equivalent (FTE) staff to the City staff to bring Pacifica to the market average.
2. Explore revenue options to generate an additional $4 to $5 Million per year to bring the salary and benefit compensation of Pacifica employees to market level.
3. Explore long-term strategies to increase City revenues, which could include Opportunity Sites, Housing and Economic Development options in the report.
4. Other options the Council may discuss and propose.
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation
NEXT 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. 38 12.a
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Attachment: Attachment 1 - Staff Presentation for Council Study Session on Revenue Generation