Pleasant Hill Sets Aside Measure K Borrowing, Eyes Sales Tax for $5M Gap

Pleasant Hill's consultants told the City Council on Oct. 5, 2026, that borrowing against Measure K would cover at best 65% of the city's roughly $5 million structural deficit, and could add $33 million in net cost. The council took no vote, but members signaled clear skepticism of financing and turned toward a possible half-cent or quarter-cent sales tax. In separate unanimous votes, they also awarded a Monument Boulevard Bridge safety contract and approved a new video wall for the council chambers.

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• Debt financing found wanting: Measure K options cover 20% to 65% of the deficit at $3 million to $33 million net cost
• Sales tax talk grows: Council members float a half-cent or 0.25-cent measure and ask staff for new scenarios
• Budget outreach coming: City staff plan monthly market booths starting in November and a possible town hall
• Monument Bridge contract awarded 5-0: A $179,670 low bid targets Caltrans-flagged fire damage and erosion

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Borrowing Can't Close the Gap

Why it matters: Pleasant Hill faces an estimated $5 million structural deficit, driven largely by CalPERS unfunded pension payments that peak near $6.4 million. The city has already cut staffing since 2012-13. Tuesday's analysis showed that refinancing would not fix the deficit and would add debt.

The basics: Voters passed Measure K, a local sales tax, in 2016, and it sunsets March 30, 2037. It repays a $26.4 million library loan now held by BMO at 1.75%. About $14.1 million of that loan remains, and it matures in June 2032. That leaves roughly $2.5 million a year of theoretical capacity from 2033 to 2037. Proceeds from either option would go into the city's Section 115 trust, an account cities use to set aside money for pension costs.

Where things stand: Chief Financial Officer Eric Chung and Mike Meyer, Vice President of municipal advisor NHA, presented two of more than a dozen scenarios they modeled.

• Option 1 (no extension): It raises about $7 million now and provides roughly $9 million of relief over nine to 10 years. That is about $1 million a year, or 20% to 25% of the deficit. It adds $12 million in debt service, for a $3 million net cost.
• Option 2 (20-year extension to 2057): It requires voter approval. It raises about $21 million upfront, or $29 million with earnings, and covers more than $3 million a year, or 60% to 65% of the deficit. It also adds a $33 million net cost.

"You are adding over $60 million of extra debt payments," said Meyer. He warned that taxable rates now sit above 6%. Restructurings of this kind worked in 2020-22, he said, when rates ran 2.5% to 3.5%. He added that rating agencies and bond investors would react negatively to "really financing your way out of the deficit and really kicking the can down the road and pushing off debt payments."

Chung said neither path stands alone: "We would definitely need either some type of revenue enhancement or an expenditure reduction, even if we implemented this." He also noted that AB 1383, a pension reform bill, was vetoed.

The other side: Councilmember Sue Noack explained why the council asked for the study. "We wanted to see if we could avoid a tax increase to the residents of Pleasant Hill by extending Measure K rather than bumping up taxes today during a very difficult economic time," she said. She noted that Measure K was designed not to fund pensions. The 115 trust holds about $2.3 million, and reserves total about $16 million. She called the $33 million a nominal figure.

The rest of the council was blunt. "It's pretty clear from looking at these slides that this is not feasible," said Councilmember Amanda Szakats, District 5. Councilmember Belle La, District 1, agreed: "I don't think that would be a good direction for us to move towards now because it would just increase our debt."

Vice Mayor Andrei Obolenskiy, District 2, asked whether the city could redirect all Measure K money to the deficit. Chung said that would cost the city its Monday library hours and its gas-tax maintenance-of-effort spending, the local road spending the city must keep up to receive state gas-tax funds. Even then, "we would still have a deficit of about $2 million left over," he said. City Manager Ethan Bindernagel clarified that the $1 million figure is that maintenance-of-effort requirement, not a reserve.

One public commenter, George, proposed rezoning his West Sherman Acres neighborhood to heavy industrial for an AI data center. He claimed it could generate about $62 million a year.

Decisions and stakeholder impacts: Mayor Zac Shess said there would be "no motion tonight, no adoption of anything." The deficit remains unresolved. Pension obligations continue to squeeze general fund services, and library hours and road maintenance would be exposed under any plan that redirects Measure K.

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The Pivot to a Sales Tax

Why it matters: With financing off the table, a revenue measure is now the council's leading option. That puts the decision in front of voters.

Where things stand: La said a half-cent tax is the stronger path. "I feel like that's a little bit more viable based on all of the scenarios that we have been looking at so far," she said. She proposed pairing the tax with about $15 million freed up after the library debt ends in 2032, while preserving $2 million a year for capital projects. By her math, that would total about $70 million over a decade. Noack and the mayor questioned those figures.

Obolenskiy put the costs in household terms. "$33 million is like $2,350 per household is what it would cost approximately," he said of Option 2. By comparison, he estimated a sales tax would cost households $75 to $150 a year. He asked staff to model Option 1 combined with a 0.25-cent tax, as an alternative to a straight half-cent increase.

Noack pointed to 2037, when Measure K expires and the city must still pay for library and road costs. "I think it's worth exploring the 0.25 cents," she said, adding that a smaller tax might run longer. Szakats credited Measure K with delivering road repaving, safer pedestrian and bike facilities and a new library.

The other side: The mayor urged caution: "Talking about any kind of sales tax measure is not a slam dunk." He framed the night's analysis as the due diligence voters would expect to see.

Decisions and stakeholder impacts: Staff said the council has given no formal direction. Residents and shoppers would carry any new sales tax. Library users and road projects depend on how the council handles the end of Measure K.

What's next: Bindernagel announced a public campaign: "We're going to have an outreach campaign because we think it's important that the public has an opportunity to ask us questions." Staff will set up booths roughly monthly at the farmers market and the Friday night market, starting in November. They will also update the January-February Budget at a Glance mailer. Noack pushed for a large town hall on the budget and unfunded liabilities, and Bindernagel said one is under consideration.

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Hardening Monument Bridge Against Damage

Why it matters: In a February 2025 inspection, Caltrans found fire damage to a girder under the Monument Boulevard Bridge at Canal Trail. It also found erosion from digging at the abutments, the supports at each end of the bridge. "The city has spent approximately $150,000 in response to cleanup support," said Associate Engineer Sean Han.

Where things stand: The project replaces fencing with concrete masonry walls and grouts rebar into place to prevent digging. It also adds a steel access gate for Caltrans inspectors. The city received eight bids. FJ&I Engineering came in lowest at $179,670, well under the $250,000 estimate. With a 15% contingency, total funding is $206,632, including $118,252 from gas tax.

The City of Concord shares the cost. La noted the split is roughly 51/49. The public works director said Caltrans inspects the city's 20 long-span bridges, and the city prioritizes repairs using gas-tax funds.

The other side: Szakats raised the people living under the bridge. "I'm wondering if the county's homelessness services will reach out to those folks that are camping there and give them time to remove their belongings before construction starts," she said. The Public Works Director responded that once the contract is awarded, "the city will partner with PD, the City of Concord, and flood control to do one final abatement per our anti-camping ordinance."

Decisions and stakeholder impacts: Szakats moved and Obolenskiy seconded. The motion passed For: 5 (Shess, Obolenskiy, La, Noack, Szakats), Against: 0, Absent: 0. Trail users and taxpayers stand to gain from fewer repeat cleanups. Unhoused people camping at the site face displacement.

What's next: Concord's cooperative agreement goes to its city council Oct. 27.

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Minor Items

• Video wall approved: Council voted 5-0 to spend $69,998.62 from restricted PEG cable-franchise funds on a bezel-less chamber display. Noack moved and La seconded; Chief Technology Officer Lynn King said the balance is kept high for equipment refreshes.
• Consent calendar: It was adopted 5-0 on a roll call vote without separate discussion.
• Indigenous Peoples' Day: Shess proclaimed Oct. 12, 2026, acknowledging Bay Miwok and Ohlone stewardship. "The Diversity Commission is deeply grateful to the mayor and city council for reaffirming our city's dedication to justice, equity, and inclusion," said Lori Sheen, Diversity Commission Chair.
• Regional housing: Noack, who chairs BAHFA, said the regional housing agency is building a coalition for a future housing measure. La reported that CalCities members voted to form a housing working group on local control.
• Hospice strike: Szakats highlighted the strike by East Bay hospice workers, who are represented by NUHW. "They're asking management to schedule negotiating sessions and bargain in good faith," she said.

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Looking Ahead

The council's next regular meeting is Monday, Oct. 19, 2026. Budget outreach booths begin in November.