CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
3/9/2026
1 SUBJECT:
City Manager’s Farewell Report
RECOMMENDED ACTION:
The City Manager’s “Farewell Report” is intended to provide observations about numerous Pacifica issues by reflecting on numerous accomplishments and emphasizing challenges and opportunities facing Pacifica moving forward. This is an informational item only, no action required by the City Council.
STAFF CONTACT:
Kevin Woodhouse, City Manager
(650) 738-7409
[email protected]
BACKGROUND/DISCUSSION:
INTRODUCTION
The City Council meeting on March 9 will be my last meeting prior to my retirement March 11.
After 8.5 years of serving as Pacifica’s City Manager, approximately 350 special and regular City Council and community meetings, and preparation/review of multiple-thousands of staff reports to the City Council, I wanted to provide some farewell observations prior to my departure. Some of my observations are about the collective accomplishments over the past eight years that City Council members, Commission/Committee members, other community volunteers, City Attorney’s Office, and especially City staff have achieved. I am grateful for and humbled by these accomplishments and the privilege I have had to lead the organization during a period of continuous improvement in Pacifica. My observations about accomplishments are intended also to provide perspective and focus on challenges and opportunities facing Pacifica now and into the future.
In the Council-Manager form of government, city managers are in the unique position of hearing and understanding the broad range of perspectives of elected officials, professional staff, and community members, and the many layers and intricacies of issues related to economic, legal, political, and technical/professional considerations. It is based on this knowledge and experience, and with humility and respect for my responsibility to transparently transfer my observations to my successor, Councilmembers, staff and the community, that I submit this Farewell Report.
TOPICS
• Financial Sustainability
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Pacifica’s financial condition is its single largest challenge and is a driver of, or at least interrelated with, the many other challenges identified in this report. Pacifica’s historical, current, and projected financial sustainability challenges have been well-articulated in recent study sessions and budget documents. In the 8 annual budgets that I have overseen, the City has successfully balanced the budget while maintaining overall levels of service and delivering strategic service enhancements by adding a modest amount of staff positions in every department. The most recent budge, FY 2025-26, was technically balanced; however, the balance was achieved through one-time policy decisions and fund shifts, including reallocating ERAF revenues, applying a one-time debt service offset, and suspending the annual Pension Trust contribution, rather than through ongoing, structurally aligned revenues and expenditures. As a result, the General Fund is not yet structurally balanced on a long-term basis.
Revenues
Ongoing Revenues have increased by more than $3.2 million through two voter-approved revenue measures - Measure Y Transactions and Use Tax and Measure M Transient Occupancy Tax Increase. The Cannabis Business Program and diligent auditing of the Business License Tax have also increased ongoing revenues by more than $780,000. And new Development Impact Fees - Parking In-lieu and Parks - are in place to increase revenues for those purposes as new and re-development occur. A study is also underway to review and potentially right-size to cost-recovery levels and align with industry best practices many of our development impact and user fees. In addition, the City has successfully brought in more than $40 million in grant funding between 2017 and 2025.
Two sources of revenue are at risk beginning this fiscal year and continuing into future years - Vehicle License Fee In-lieu revenue the state has started to take away, and decreases in Transient Occupancy Tax revenue due to policy changes to the Short-term Rental Program.
Expenditures
As is the case for every city and business, the cost of doing regular business increases year-over-year due to unavoidable economic drivers. Pacifica has historically contained expenditures by eliminating positions and service levels in previous decades and, as a result, operates with staffing levels 15% lower on average organization-wide than comparable cities in our same labor market. In addition, compensation levels for employees remains 10-20% lower on average than comparable cities. This workforce deficit has necessitated prudent staffing and labor union-negotiated compensation increases over the past eight years to not fall even further behind competitors. These modest increases, while modestly increasing on-going expenditures, have been essential to maintaining service levels expected by the community while attempting to stave off an organizational downward spiral Pacifica is teetering on the edge of.
Financial Best Practices
While prudently balancing the budget from year to year, the City has accomplished numerous public financing best practices. First, in 2017 the City had a simplistic General Operating Fund Reserves Policy, but no reserves funding. We since have expanded the Reserves Policy, began funding the reserves at incremental levels, and have now achieved reserve funding levels recommended by the Government Finance Officers Association (GFOA). The City also achieved an AA+ bond-rating during refinancing of bonds in 2019.
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And the City has achieved unmodified opinions on its Annual Comprehensive Financial Report (ACFR) for numerous years straight. With enhancements to its Annual Budget process and document, the City has achieved awards of excellence for both its ACFR and Annual Budget for several years in a row, a first in Pacifica’s history.
Looking Forward
Many cities are currently faced with significant financial challenges. Sales tax revenue is down, economic stress is high, and the laws and politics related to voter-approved revenue measures are becoming more challenging year by year. Pacifica’s challenges are exacerbated because expenditures (and therefore services) have already historically been “cut to the bone,” and our single largest revenue source, property taxes, has not kept pace with the normal increases to the cost of doing business, due to little to no new and redevelopment. Additionally, the magnitude of the structural deficit, $3 to $6 million dollars over the next two years, 6% to 12% of General Fund revenues, is significant when looking at the amount of revenue different strategies might possibly generate and on what timeline.
As covered in the recent Revenue Generation study sessions, Pacifica needs to continue its comprehensive, strategic, and multi-layered approach to containing expenditures and increasing revenues. For the mid- to long-term, strategies to improve operational efficiencies such as through technological improvements, Economic Development efforts to improve sales and hotel tax revenues, and Community Development efforts to facilitate appropriate levels of new and re-development will be necessary. For the immediate-term, a voter-approved revenue measure is likely to be necessary, or else significant reductions in services will be required.
• Economic Development
Over the past 8 years, we have strategically grown the Economic Development (ED) Program from one manager (which was vacant when I arrived in 2017) to 2+ staff: analyst, manager, and part of Assistant City Manager focus. The growth of the program began when I created the Chief Financial Sustainability Officer position, which attracted Ms. Carter to Pacifica to serve as both ED Manager and Finance & Administrative Services Director, before she later became Assistant City Manager. The Council’s recent approval of a reclassified Economic and Housing Development Manager position is an important strategic change that reflects the importance of Housing as an economic driver in the city while also enhancing broad ED strategies.
In 2024, the City was awarded the California Association for Local Economic Development Award of Excellence for the Vision 2025 & Beyond Initiative. Vision 2025 combined financial forecasting, economic studies identifying short and long-term opportunities and support for local businesses, revenue enhancements, including the successful passage of a ½ cent Transaction and Use Tax, robust public engagement, and finally telling Pacifica’s story of many major priority projects and initiatives that are currently underway.
The ED Program is critical to Pacifica’s future. The scope and near-term focus of the ED Program was comprehensively articulated in a recent Study Session with the City Council, and includes actions related to housing/mixed-use developments, revitalizing commercial centers, other economic opportunity sites, and catalyst projects for the West Sharp Park downtown district. I won’t reiterate those details here, other than to emphasize that Economic Development needs to be a multi-layered approach with a very strategic focus for Pacifica City Council 4
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how limited staff time is spent, and the ED Workplan provides this focus. • Plan Pacifica
Completing a comprehensive General Plan Update, Local Coastal Land Use Plan Update, Sharp Park Specific Plan, and Housing Element, altogether branded as “Plan Pacifica,” has been a major focus for the City. Modernization of critical policy and land-use documents brings clarity of requirements and certainty about process for property owners who are interested in making improvements and developers who are interested in investing in Pacifica. These foundational plans were major undertakings for the City and took many years to update, including significant public engagement in the process. However, they are also just the beginning point of many follow-up implementation actions that are necessary.
Those implementation actions will drive the majority of the Community Development Department’s workplan for years to come, on top of CDD’s non-discretionary processing timelines and workload for development applications per state law.
The implementation of these plans will require new and innovative approaches to community engagement to be able reach and hear from all segments of the Pacifica community and to achieve collective understanding about the economic, environmental, legal, and social values and vision at stake for Pacifica’s future. In order to balance robust public engagement with available staff and financial resources and the need for efficient decisionmaking by the City Council, the community engagement process will need to articulate, and the community respect and honor, the milestones when the City Council must make its decisions and move forward. Otherwise Pacifica risks repeating its history of planning processes that take way too long to complete, create risks to local control, and suck up limited staff and financial resources that need to move on to other priority projects. • Climate Action and Coastal Adaptation & Resilience
As a coastal community with 6 miles of coastline and neighborhoods that have pre-Coastal Act development right up to or near the shoreline, coastal adaptation and resilience is a major challenge for Pacifica. In addition, global climate change is exacerbating environmental impacts, and Pacifica is committed to doing its part to reduce greenhouse gas emissions. In addition to the important “Plan Pacifica” policy documents discussed above, the City’s new Climate Action & Resilience Plan and newly formed Climate Action & Resilience Committee are focused on actions the City can take to reduce our greenhouse gas emissions. The challenge with implementation is mostly a financial one (see the Financial Sustainability section of this report), relating both to capital project funding and prioritization of staffing resources.
Regarding coastal adaptation and resilience, Pacifica’s Local Coastal Land Use Plan, certified by the Coastal Commission in 2025, has moved Pacifica into a leadership role in California regarding long-term planning for shoreline adaptation policy and strategies. As mentioned in the “Plan Pacifica” section above, important implementation tasks such as developing the Shoreline Adaptation Program and Coastal Access Resilience Program will require major staff time and funding resources to complete.
Pacifica’s successful LCLUP certification has also placed the City in a leadership role for how cities can and will need to work collaboratively with Coastal Commission staff on these types of important coastal adaptation and resilience matters.
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• Infrastructure and Capital Improvement Program
Pacifica’s coastal environment, aging infrastructure, and financial sustainability challenges that prevent annual on-going funding for the Capital Improvement Program (CIP) are a major concern for Pacifica’s future. Not unlike many cities, Pacifica has infrastructure replacement needs that are financially out-of-reach for a small community - more than $370 million for Pacifica. But some notable progress has been made:
➢ Civic Center: Renovation of the Civic Center campus, complete with public-use park space and meeting rooms for community groups, has been a great benefit to the organization and the community.
➢ Streets Improvement Program: Implementation of a 5-Year Maintenance Program with deployment of a variety of treatment options has improved the City’s Pavement Condition Index in recent years. In addition, numerous successful grant applications have allowed for significant streets, sidewalks, and bike lane improvements in many areas of town.
➢ Beach Boulevard Infrastructure Resiliency Project, Pier, and Esplanade Infrastructure Protection Projects: Progress has been made on these important coastal resilience projects, with millions of dollars in federal, state, and City funding invested. However, more funding is needed. These projects are essential both to protecting critical infrastructure (water, wastewater, other utilities, and roads), as well as to the public’s access to the shoreline.
➢ Wastewater Projects: As an enterprise business line with funding from wastewater fees, major progress has been made to make Pacifica’s wastewater program an industry leader in recent years. The major Wet Weather Equalization Basin has proved successful in preventing sanitary sewer overflows, on-going replacements of sewer mains are benefitting the environment, as are upgrades to pump stations, and major upgrades to equipment and systems at the Calera Creek Water Recycling Plant are improving the treatment of wastewater. Both divisions, Collections and Plant Operations, have received numerous industry awards in recent years. ➢ Parks Replacements: Utilizing Roy Davies Trust funds, Parks impact fee funds, and other sources, the Priority Parks project is underway to upgrade four parks. When staff and funding resources allow, pursuing development of a Parks Master Plan would be helpful to prioritize future parks improvements. ➢ Libraries: Replacement of the Sharp Park Library and upgrades to the Sanchez Library are important social infrastructure projects for the community. They are expensive projects, and will require a combination of funding strategies, including a voter-approved bond measure (or revenue measure that can be bonded against) to fund a share of these facilities. The Library Advisory Committee, Council, and staff have been engaged in public information and education efforts to build awareness and support of the importance of modernized library facilities.
Many cities in our region have been able to build into their structurally balanced budget annual CIP funding from their General Operating Fund. Pacifica has not been able to do that regularly at any significant level of funding, therefore many projects in the CIP are unfunded and rely solely on special funds, development impact fees, or grant funding.
Identifying at least $1 million in General Operating Fund funding for the annual CIP would be Pacifica City Council 6
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an aspirational goal for Pacifica’s financial future.
Development impact fees can be a major source of funding for the CIP, however development projects are necessary in order to collect these fees. This ties back to the importance of new and re-development to Pacifica’s financial future. • Organizational Culture and Community Trust
An organization the size of Pacifica (approximately 200 full-time employees) allows for employees to get to know each other professionally and to develop strong working bonds because employees wear many hats and their responsibilities intersect often in the course of business. This inter-woven fabric of the organization allows for both bottom-up and topdown creation of a strong organizational culture to reinforce values of respect, empathy, trust, teamwork, ethics, public service excellence, continuous improvement, as well as fun and celebration. These are the values that make the Pacifica organization strong, and they are especially important when employees are over-worked, underpaid, and at times face criticism from the community, Councilmembers, or Commission/Committee members. This culture and these values don’t just naturally occur; they require deliberate focus and effort to strengthen.
Strengthening this culture, as well as continuously working to gain the community’s trust is an important on-going focus for Pacifica’s future. Unfortunately, in today’s political and social context, a culture of grievance and mistrust of the expertise of trained professional employees has trickled down from the federal to the local level, even in Pacifica. Difficult and divisive issues (and Pacifica has many) must continue to be approached in a manner to facilitate dialogue and understanding, with all opinions fairly heard and considered.
Complete agreement on difficult issues is not possible, but honoring and respecting a fair process and the City Council’s decision-making authority is important if meaningful levels of trust are to be achieved and maintained in a community. • The Pandemic
A notable disruption in recent years was the global Coronavirus Pandemic. Pacifica was able to effectively navigate through this difficult period of uncertainty and, with the help of American Rescue Plan Act funding, was able to manage the economic impacts. It was difficult on the organization and the community. San Mateo County and all cities in the County did an exceptional job of coordinating information and actions, and this close coordination has helped strengthen regional coordination and partnerships for the better. • Strategic Planning and Workplan Stability
An industry best-practice that I emphasized beginning in 2017 was to conduct goal-setting early in the annual budget development process, followed by creation of detailed workplans for each priority and periodic updates to track and report progress transparently to the Council and community. In 2023 the timing was right to undertake a more comprehensive and true Strategic Plan development process, to include Mission, Vision, Values, Goals, and Strategies.
The Strategic Plan serves as a stabilizing guidance document for the organization and an important communication tool to the community. For local government work to be effective Pacifica City Council 7
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and ensure prudent use of resources, it is important for there to be stability and consistency from year to year in the delivery of major programs and projects. So many of the complex programs and capital projects that fall to local governments to deliver take many years to develop and implement. Therefore, consistent policy direction from Councilmembers from year to year and across Council transitions, or clear and fact-based explanations for when program or project changes might be needed and in the best interest of the community, are critical to efficient and effective service delivery. The Strategic Plan provides the framework to annually discuss, renew, or refine priorities, and provide continuity and stability for the organization and prudent use of resources. This best-practice is essential to continue in Pacifica.
• Other Topics
There are numerous highly visible topics Pacifica faces that I chose not to discuss in this report because they are complicated and controversial policy topics that do not lend themselves to a concise summation or observation, and there have been numerous reports and City Council discussions about these topics. Nonetheless, they present challenges for Pacifica into the future, and more progress will need to be made on them. A partial list of these topics include:
➢ Over-sized vehicles on streets and in the state beach parking lot, vehicle habitation, homelessness, and future funding for the Temporary Safe Parking Program; ➢ Builder’s Remedy/SB 330 housing applications, the impact of complex state housing laws and processing timelines on an understaffed Community Development Department, Housing Element implementation, and the time and resource impact of appeals of development projects;
➢ Short-term Rental Ordinance implementation and enforcement; ➢ Coastal high surf and storm impacts on an understaffed Public Works Field Services Division, and the impact of complex coastal capital projects on an understaffed Engineering Division;
Technology improvements is another topic important to Pacifica’s future,but is less visible because it is more internal organization focused. However, once implemented, technology improvements are intended to improve organizational efficiencies and therefore services to the community. Pacifica has implemented many new and modernized systems in recent years, with many more forthcoming for systems in departments such as project application and permit tracking systems in Community Development, GIS for all departments, agendamanagement systems and imbedded video for Council meeting recordings in order to move away from the archaic and inefficient practice of verbatim meeting minutes, continuation of improvements to financial and HR systems, enhanced AI technology, cybersecurity best practices, and more.
CONCLUSION
I appreciate the opportunity to reflect on and provide observations publicly about these numerous major topics before I leave Pacifica. Challenging years lie ahead, but major progress has been made to position Pacifica to confront these challenges. I am confident I am leaving Pacifica a better place in which to live, work, and play than when I arrived, and better equipped Pacifica City Council 8
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for the challenges ahead.
It has been my honor and privilege to serve as Pacifica’s City Manager these past 8.5 years.
I’m am grateful to all of the Councilmembers I have worked with, all of the dedicated and hardworking staff, and all other volunteers passionate about Pacifica.
ALTERNATIVE ACTION:
This report is information only and no action is required.
RELATION TO CITY COUNCIL STRATEGIC PLAN:
This report relates to City Council’s entire Strategic Plan.
FISCAL IMPACT:
There is no fiscal impact associated with this report.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST: