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HomeMy WebLinkAbout2026-04-28 | Adjourned Regular Meeting CITY OF HERMOSA BEACH CITY COUNCIL Post-Meeting Agenda Tuesday, April 28, 2026 (5:00 PM) Council Chambers 1315 Valley Drive Hermosa Beach, CA 90254 CITY COUNCIL Mike Detoy, Mayor Michael D. Keegan, Mayor Pro Tem Ray Jackson, Councilmember Dean Francois, Councilmember Rob Saemann, Councilmember David Pedersen, City Treasurer APPOINTED OFFICIALS Steve Napolitano, City Manager Jason Baltimore, Interim City Attorney EXECUTIVE TEAM Brandon Walker, Administrative Services Director Martha Alvarez, City Clerk Alison Becker, Community Development Director Lisa Nichols, Parks and Recreation Director Landon Phillips, Police Chief Joe SanClemente, Public Works Director AMERICANS WITH DISABILITIES ACT OF 1990 - To comply with the Americans with Disabilities Act of 1990, Assistive Listening Devices (ALD) are available for check out at the meeting. If you require special assistance to participate in this meeting, you must call or submit your request in writing to the Office of the City Clerk at (310) 318-0204 or at cityclerk@hermosabeach.gov at least 48 hours before the meeting. PARTICIPATION AND VIEWING OPTIONS Hermosa Beach City Council meetings are open to the public and are being held in person in the City Hall Council Chambers located at 1315 Valley Drive, Hermosa Beach, CA 90254. Public comment is only guaranteed to be taken in person at City Hall during the meeting or prior to the meeting by submitting an eComment for an item on the agenda. As a courtesy only, the public may view and participate via the following: Zoom: https://us02web.zoom.us/j/89968207828? pwd=bXZmWS83dmxHWDZLbWRTK2RVaUxaUT092 • Phone: Toll Free: (833) 548 0276; Meeting ID: 899 6820 7828, then #; Passcode: 472825• eComment: On the HTML agenda, click an agenda item, then click on the blue “Leave comment” (on computer) / blue speech bubble (on phone/tablet) button to provide a comment for that item. Submit eComments no later than three (3) hours before the meeting start time. • Supplemental Email: Submit a supplemental email for agenda items only to cityclerk@hermosabeach.gov. Supplemental emails should indicate the agenda item and meeting date in the subject line and must be received no later than three (3) hours before the meeting start time. Emails received after the deadline but before the meeting ends will be posted to the agenda the next business day. Writings distributed to all, or majority of all, of the City Council after the agenda has been posted shall be available for inspection at the City Clerk's Office located at 1315 Valley Drive, Hermosa Beach, CA 90254 during regular business hours. • The City will also plan to broadcast the meeting via the following listed mediums. Cable TV: Spectrum Channel 8 and Frontier Channel 31 in Hermosa Beach • YouTube: https://www.youtube.com/c/CityofHermosaBeach90254 • Live Stream: www.hermosabeach.gov/agenda• Cablecast App: Available on supported devices and smart TVs• If you experience technical difficulties while viewing a meeting on any of our digital platforms, please try another viewing option. Page 2 of 39 Pages 1.CALL TO ORDER— STUDY SESSION *1.a 2.PLEDGE OF ALLEGIANCE 3.ROLL CALL 4.PUBLIC COMMENT 4 5.OPENING REMARKS (City Manager Steve Napolitano) *6.OVERVIEW OF 2026-27 BUDGET 9 (Administrative Services Director Brandon Walker) Purpose and outlook• Fiscal Year 2026-27 status• Revenue and expenditure trends• Forecast and challenges• Revenue options and department strategies• Budget calendar and process• 7.COUNCIL QUESTIONS 8.PUBLIC COMMENT ON OVERVIEW OF 2026-27 BUDGET 9.COUNCIL DISCUSSION Recommended Action: Motion to authorize a variance to extend the City Manager's budget delivery deadline from May 15, 2026, to May 30, 2026. 10.ADJOURNMENT Page 3 of 39 City Council Adjourned Regular Meeting - April 28, 2026 Ecomment Report Agenda Item Name Comment Position Attachment URL PUBLIC COMMENT howard Lee Re: Adjourned Regular Hermosa Beach City Council meeting agenda for 4/28/2026 Honorable Councilmembers, City Manager and others: This Council meeting appears to be some kind of pre-pre-actual Budget-Study-Session. The problem is that the agenda is all but useless to the both the public, and to the Councilmembers themselves. It appears the staff is to be giving the public and councilmembers some pertinent pre-pre-actual Budget-Study-Session meeting (to be in some weeks ahead) information at this meeting and expect all to digest that information and respond on the spot. For example, Agenda Item-6 indicates that the 'Administrative Services Director' will present the following line items however the agenda has no other information. Zero staff reorts, Why? 1-Purpose and outlook 2-Fiscal Year 2026-27 status 3-Revenue and expenditure trends 4-Forecast and challenges 5-Revenue options and department strategies 6-Budget calendar and process Why isnt the information to be presented by the Director orally, by Power-Point, or both presented with the agenda? It seems like the City Manager and others are keeping this information closely held for no good reason. The agenda unfortunately is thusly all but useless without any staff reports. Sorry, but in my view this agenda represents extremely poor preparation that needs great improvement in the future. Staff presentations would best be provided with the agenda 72-hours in advance of the meeting, especially when the staff is looking for a response and perhaps suggestions and direction from the public and councilmembers. Most Respectfully, Howard Lee (Resident) - PUBLIC COMMENT tony for special event transparency Dear City Council Dear Director Nichols, Re Memorial Weekend Fiesta Event Regarding Director Nichols iattached email response, please note that just because the chamber of commerce agreement doesn't prohibit the use of our beaches during the Memorial Day Fiesta that doesn't mean that the Parks Commission reviewed AND explicitly approved use of the beach zone during the Fiesta. Are you suggesting the Council and Parks Commission explicitly approved the north or south pier zones for the Fiesta? The Parks Commission exists among other things to represent resident concerns and many residents commission members and even some council members have expressed concern about over commercialization of the beach. I do not recall that the use of the beach by the chamber for the Memorial Weekend Fiesta was even discussed, much less approved by either the Parks Commission or the Council. The Special Events Policy Guide says the event producer is fully responsible all vendors and event activities operate within the approved event footprint. Any Reasonable Interprestation of the Special Events Policy Guide requires City Council approval to use the north/south pier special event zones; especially if the beach zones were not included in previous Event Calendar. However, Beach zones were NOT includes in the most recent publicly viewable Special Events Calendar AND every other on-beach event except the Fiesta lists the north and/or south pier zone as approved. No Position Page 4 of 39 City Council Adjourned Regular Meeting - April 28, 2026 Ecomment Report PUBLIC COMMENT tony Dear City Council, Does CIP 111 and its 575k budget including the 500k donation cover both the Community Center monument sign design & implementation as well as the design & implementation of any other wayfinding signs throughout the city. That is, excluding the Community center monument sign, will the city expect residents to pay for the design & implementation of additional wayfinding signs? If so how much more? I think its clear the primary beneficiaries of these additional wayfinding signs would be the business district so i dont understand if additional funds are required then why city funds would be used for this. The Chamber of Commerce or business donations should be used to pay for additional signs. Full stop! Implementation of these additional signs given the magnitude of the fiscal challenges the city is facing; else no additional signs. Our fiscal challenges require hard choices. We have $14.2M in cumulative unfunded general fund operating expenses by 2031. We have at least $50M in high priority unfunded Capital Projects We have more Pier marine inspections that are likely to reveal the need for more short term emergency maintenance and the city is considering funding additional wayfinding signs? Against Page 5 of 39 City Council Adjourned Regular Meeting - April 28, 2026 Ecomment Report OVERVIEW OF 2026-27 BUDGET Christopher Felix I respectfully oppose increasing the Transient Occupancy Tax without coupling that increase to a dedicated tourism investment strategy. A stand-alone increase in TOT risks making Hermosa Beach less competitive relative to neighboring South Bay destinations, particularly when visitors have many nearby lodging alternatives. As a small beach market competing with larger and more established neighboring destinations, raising the tax burden without a corresponding demand-generation strategy could displace visitor spending rather than increase overall city revenue. While I understand the City must address its budget shortfall, I do not believe a simple tax increase is the best long-term solution. I would, however, support considering a more targeted model tied to a Tourism Improvement District / Tourism Marketing District, where a modest assessment is specifically directed toward destination promotion and tourism demand generation. This approach has been used successfully in other California beach communities, including Huntington Beach, to strengthen off-season demand, increase visitation, support higher average daily rates, and ultimately generate more revenue for both hotels and the City. That model creates a shared benefit: lodging operators help fund tourism promotion, visitor demand grows, tax revenues increase through volume rather than tax burden alone, and the destination becomes stronger over time. By contrast, increasing TOT without reinvesting in tourism promotion imposes additional costs without providing a corresponding mechanism to grow demand. I encourage the Council to consider strategies that expand visitation and revenue through destination development, rather than relying solely on higher taxation. Thank you for your consideration. Against OVERVIEW OF 2026-27 BUDGET Claudia Berman The budget deck is FANTASTIC. Thank you for the excellent work: comprehensive & clear. - Page 6 of 39 City Council Adjourned Regular Meeting - April 28, 2026 Ecomment Report OVERVIEW OF 2026-27 BUDGET Ira Ellman - Brandon Walker has put together an excellent budget package. It is the first comprehensive analysis residents have seen showing a realistic look at the citys difficult financial position. - For FY 2027 and beyond, Hermosa has increasing departmental expenses and significantly higher County fire, lifeguard and beach maintenance. In addition, large capital expenditures are needed including City Yard, pier and police facility. - Closing the $3.2mm gap for the coming fiscal year and future years will be difficult. Cutting departmental expenses will be necessary, as short-term revenue generation is not an easy task. Increasing taxes on Hermosa residents is more than likely to fail again. Recommendations, outside of those mentioned by Brandon in the budget presentation: - The City Council should form a sub-committee and/or citizens group to investigate potential revenue, both incremental to current sources and creative new sources. - Make sure we have staff in place who have expertise in obtaining grants. - Increase controls on overtime (pre-approval, if that is not in place) - As part of this years budget process, department heads should review with the city council and residents how their resources are utilized to service the community and attain goals. For PUBLIC COMMENT Michele Hampton Let's start writing speeding tickets every day to the people speeding down our major streets. Monterey Blvd, Hermosa Beach Ave, Pier Ave., Valley Drive and Ardmore Ave. Police could write a few hundred tickets every month to ge No Position OVERVIEW OF 2026-27 BUDGET Michelle Crispin On behalf of the Hermosa Beach Chamber of Commerce & Visitors Bureau, we would like to share a tourism perspective as the City considers a potential increase to the Transient Occupancy Tax. We recognize the City is navigating real budget considerations and appreciate the need to explore additional revenue sources. From a tourism standpoint, its important to note that this revenue is directly tied to visitation. TOT performs best when occupancy is strong, and occupancy depends on how competitive and compelling the destination is. Hermosa Beach operates in a highly competitive coastal market. Visitors are often comparing Hermosa with nearby cities like Manhattan and Redondo Beach. Even small differences in the overall cost of a stay can influence where those bookings land, which is why maintaining competitiveness alongside efforts to attract visitors is so important. No Position Page 7 of 39 City Council Adjourned Regular Meeting - April 28, 2026 Ecomment Report OVERVIEW OF 2026-27 BUDGET Laura Pena Dear Mayor, Council Members, and Staff - I appreciate the added powerpoint on the Budget Overview. It was incredibly helpful in understanding some of the challenges facing our City. The presentation asks, How did we get here? That is important, but the bigger question now is: What do we focus on going forward? We are facing a structural challenge: a roughly $3.2 million deficit, with costs growing faster than recurring revenues. The goal should not be simply to close one budget gap. The goal should be to build a more resilient fiscal model for our City. I respectfully encourage the Council to consider the following recommendations: 1. CREATE A STRUCTURAL BALANCE ACTION PLAN. The public needs a simple table separating one time money from recurring solutions. Each option should show projected revenue or savings, whether it is one time or ongoing, timeline, risk, and tradeoffs. This would show what solves this years problem and what closes the long term gap. 2. EVALUATE REVENUE OPTIONS THROUGH A FISCAL TRADEOFF LENS. Parking, citations, fees, STR enforcement, sales tax, city asset leases, and land use changes may all have a role. But each choice has consequences. STR enforcement should separate one time collections from reliable annual revenue. Other fee increases may recover costs, but can also discourage small projects, tenant improvements, events, and investment. 3. TREAT ECONOMIC DEVELOPMENT AS A FISCAL STRATEGY. We cannot cut our way to long term stability. We need to grow recurring revenue in ways that strengthen the local economy: reinvest in commercial areas, fill vacancies, support restaurants and retailers, attract visitor spending, encourage high performing uses, and support appropriate mixed use development. 4. CREATE A RESIDENT & BUSINESS ADVISORY GROUP ON REVENUE AND INVESTMENT. We have residents, business/property owners, finance professionals, and entrepreneurs who understand markets, investment, and public private partnerships. Why are we not using that expertise more intentionally? A short term Economic Resilience Advisory Group could identify new revenue streams, evaluate P3 opportunities, review barriers to investment, and recommend practical ways to grow revenue without simply raising costs on the same people. 5. IMPROVE PROCESSES BEFORE RAISING MAJOR FEES. A cost recovery model should not only ask, How much staff time does this take? It should also ask, Should it take this much time in the first place? If applications can be simplified, handled administratively, or improved through No Position OVERVIEW OF 2026-27 BUDGET Amish Desai I do not believe implementing this would be good for business. Hotel rates in the area are already higher than in many other places, and hotels already contribute significant revenue to Hermosa Beach that helps fund future city development. For that reason, I am against this proposal. Against Page 8 of 39 FY 27 BUDGET STUDY SESSION:FISCAL OUTLOOK APRIL 28, 2026 Page 9 of 39 FY27 Budget Outlook & Strategy FY27 General Fund outlook Structural imbalance between revenues and expenditures Objectives: projection, drivers, solutions Page 10 of 39 Executive Summary & Strategy Shift FY27 Structural Deficit: ~$3.2M Balancing with one-time funds (not sustainable) Costs outpacing revenues Shift to structural balance Page 11 of 39 How Did We Get Here? •Post-COVID budgets balanced with surpluses •ARPA ~$4.6M, vacancy savings, CIP delays •Used for Insurance, Fleet, CIP deficiencies •Temporary balance masked structural issues Page 12 of 39 •~$1.3M–$1.5M in ongoing vacancy savings reflects a structural budget gap •Savings are unreliable and declining in impact •Small staff size amplifies risk—vacancies affect service delivery •Retention is critical to maintain capacity and institutional knowledge How Did We Get Here? Fiscal Year $ Variance % Variance FY2021 -$1.3M -6.3% FY2022 -$1.5M -6.5% FY2023 -$1.5M -5.9% FY2024 -$1.3M -4.7% FY2025 -$1.4M -4.8% Page 13 of 39 How Did We Get Here? Fiscal Year Unspent Funds ($)Primary Allocation Uses 2019–20 1,751,688 General Fund (temporary holding; later to CIP/reserves) 2020–21 5,828,197 CIP, Insurance Fund, some GF assignment 2021–22 3,835,617 GF assigned; later to CIP and equipment/reserves 2022–23 2,700,989 CIP, Equipment Replacement, Insurance Fund 2023–24 3,128,722 Primarily CIP, plus Insurance stabilization 2024–25 2,239,276 Expected: CIP, Equipment, Insurance 2025–26 0 None Page 14 of 39 What This Was Covering Up •Rising costs: labor, fire/lifeguard/beach maintenance contracts, inflation, infrastructure •Revenue gap: fees lag cost recovery •Ongoing subsidies: Lighting and Landscaping, Stormwater, programs •Structural imbalance persists Page 15 of 39 Economic Context Tourism-driven, beach/downtown focused Built-out with limited development Revenue tied to visitors (Sales Tax, TOT) Stable but constrained economy Page 16 of 39 Budget Status FY 25: ~$2.24M carryforward FY26 shortfall: ~$548K covered by one-time solutions FY27 supported by one-time funds not sustainable Page 17 of 39 Five-Year Forecast Page 18 of 39 Trends & Outlook Growth ~2–4% annually Property: ~3–4%, Sales Tax/TOT: ~1–3% Below cost growth (~4–6%+) Insufficient to match costs Page 19 of 39 EXPENDITURE TRENDS & OUTLOOK Costs growing 4–6%+ annually vs. flat $1.3M– $1.5M vacancy savings Labor & pensions rising 3% / 4.9% Fixed costs: Fire contract 5–8% and non-personnel 3–5%+ ARPA funds exhausted Upside risk: inflation, CalPERS, labor agreements CIP not included: City Yard, Pier, other needs Bottom line: Structural growth exceeds offsets—vacancy savings not sustainable Page 20 of 39 Upcoming Cost Challenges LA County Fire Contract •+26% increase (~$1.8M over 3 years) •Ongoing pressure on General Fund LA County Lifeguard & Beach Maintenance Services •Additional ~$3.4M annual cost for lifeguard •Additional ~$1.5M annual for beach maintenance •Currently funded via parking structure revenue share •Exposure if revenues decline or costs increase Major Unfunded Capital Needs City Yard: ~$20M (no identified funding source) Pier Project: $50M+ (significant long-term obligation)Page 21 of 39 Fund Balance •FY 2023–24: Reserve target increased 16% → 20% •Current reserves: ~$10.6 millionPolicy & Current Status •One-time uses only (not ongoing operations) •Supports financial stability, not budget balancingPurpose of Reserves •Typical city reserve: 15%–25% •Hermosa Beach’s 20% target aligns with best practicesBenchmark Alignment •Buffers economic volatility (tourism, sales tax) •Funds emergencies & coastal risks •Supports infrastructure repairs •Helps avoid service cuts Why It Matters Page 22 of 39 Overtime Page 23 of 39 Overtime •Cost growth reflects compensation increases: Year-over-year increases primarily reflect negotiated salary and benefit increases •Police overtime is structural: Driven by 24/7 minimum staffing and response time requirements, requiring backfill. •Public Works overtime reflects higher demand: Increased OT tied to greater infrastructure, service response, and special events needs. •Community Services reflects increased activity: OT driven by increased enforcement activities •Not discretionary spending: Overtime tied to core safety, service delivery, and community activity levels. Page 24 of 39 CIP Overview Structural Need •~$8M–$12M annually (low-end) for basic CIP •Ongoing investment required for core infrastructure Funding Risk •Reliance on state/county special funds vs. General Fund •Unpredictable and not scalable → increasing exposure Cost Pressure •Deferred maintenance increasing lifecycle costs •Inflation (~3–5%+) in construction, materials, labor Unfunded Liabilities •City Yard, Pier rebuild/rehab, and other CIP not fully reflected Bottom Line: CIP needs are structurally underfunded and growing—sustainable funding required Page 25 of 39 Current Measures Revenue Enhancements (Implemented / In Progress) •Parking (rates & programs) → ~$1.5–$2.0M •Parking citation increases → ~$0.4–$0.6M •Fees/Cost Recovery (discussion later tonight) → ~$1.0M •Business License Enforcement → ~$100K Operational Efficiency (Technology Investments) •Core Systems Modernization (ERP upgrade and recreation software implementation) •Revenue & Enforcement Tools (Parking citation system and collections improvements) •Data & Performance Management (Enhanced tracking, monitoring, and reporting) Capital Funding Strategy •Focus on core needs •Challenge of grant funding Page 26 of 39 Current Measures Expenditure Strategies (FY 27 Budget Process-Primary Focus) •Departments developing up to 10% reduction strategies •Vacancy management: evaluating each position Service Trade-Offs Reduced service levels Delayed programs and capital projects Workforce impacts and capacity constraints Total Potential Impact: ~$2–7M+ (revenue + reductions combined) Page 27 of 39 Future Revenue Options (Policy) Short-Term Rental (STR) Revenue •TOT & business license enforcement for STRs Potential retro collections-Up to $5M On-Going Collections-~$1m annually Sales Tax Measure •Local sales tax increase •Each ¼ cent increment generates ~$1M annually •Requires voter approval Page 28 of 39 Future Revenue Options (Policy) Parking & Mobility Revenue (Locally Controlled, Scalable) •Dynamic parking pricing (beach/downtown) and peak pricing (weekends/summer) •Requires upfront capital investment (technology, meters, systems) •Can generate meaningful revenue with minimal new taxes Page 29 of 39 Future Revenue Options (Policy) City Assets & Other Local Revenue •Development and leases on City-owned property (optimize use and pricing) •Opportunity to generate ongoing, locally controlled revenue Assessment Modernization (Landscaping & Street Lighting District) •Assessment outdated (~since 1996) → ~$400K/year General Fund subsidy •Costs rising faster than assessment revenues •Increase requires Prop 218 vote (majority protest) → legally constrained and politically sensitive Page 30 of 39 Future Revenue Options (Policy) Stormwater Funding •Outdated fee → ongoing General Fund subsidy (~$700K/year) •Costs increasing due to regulatory requirements and infrastructure needs •Revenues not keeping pace → structural funding gap •Fee updated requires Proposition 218 process and potentially voter approval •Policy considerations: maintain subsidy vs. pursue sustainable, dedicated funding Page 31 of 39 Future Revenue Options (Long-Term) Unlock development through targeted upzoning: Relax height and density limits in key corridors to enable mixed-use, hotel, and redevelopment projects, unlocking viable housing and increasing long-term revenue. Align land use with revenue growth: Prioritize high-value uses, invest in public realm, and reinforce Hermosa Beach’s premium coastal economy to grow property, sales, and tourism taxes. Maximize sales tax per square foot: Focus on high-performing retail, dining, and experiential uses to ensure prime areas generate the highest Page 32 of 39 Budget Process •Tonight: Fiscal Outlook •May 5th: Joint PW/PR Commission-CIP Review •May 12th: Department FY 27 Budget Presentations •May 26th: Budget Hearing •May 28th: CIP Special Study Session •June 9th: Budget Hearing •June 23rd: Final Budget Hearing/Adoption Page 33 of 39 Budget Process Municipal Code requires the preliminary budget be presented to Council by May 15 •Council approved an extension to May 30 last year •Request: Approve extension to May 30 Why This Matters: Better budget accuracy & completeness More time for Council review & public input Enables a more informed, transparent discussion Next Steps: Staff will return to evaluate potential updates to this requirement Page 34 of 39 Discussion & Policy Direction REVENUE VS REDUCTIONS USE OF ONE-TIME FUNDS GOAL: STRUCTURAL BALANCE Page 35 of 39 FY 27 BUDGET STUDY SESSION:FISCAL OUTLOOK APRIL 28, 2026 Page 36 of 39 Page 37 of 39 Page 38 of 39 Page 39 of 39