The City is spending $8M to $12M a year fixing things. Available project funding for next year: $4.7M. A pandemic-era cushion that papered over the gap is gone and the unfunded backlog has now grown to somewhere between $148 million and $280 million, with the Pier replacement now added to the list.
For the past several years, Hermosa Beach has been able to fix its sewers, repave its streets and repair its parking structures with money that wasn't supposed to last forever: pandemic-era federal aid, year-end General Fund surpluses, savings from unfilled jobs, and the occasional grant. That money worked. The Public Works Department went from completing roughly four capital projects a year to completing eleven this fiscal year, with another three due to wrap before June.
The problem, as Public Works Director Joe SanClemente lays out in a 22-page staff report headed to a joint Parks and Public Works Commission meeting on May 5, is that the cushion is gone.
"The City can no longer rely on one-time or external funding to sustain its capital program," SanClemente writes, "and identifying stable, ongoing funding solutions will be critical to maintaining infrastructure and long-term fiscal sustainability."
Translated: the model is broken, and somebody is going to have to figure out how to pay for the city's pipes, roads, and buildings on a recurring basis, or stop fixing them.
The Capital Improvement Program (the city's rolling list of physical infrastructure projects) is proposed at $23.2 million for FY 2026-27, covering 24 projects. But the headline number is misleading. Of that $23.2 million, only about $4.7 million is genuinely new revenue. The remaining $18.5 million is money rolled over or transferred from prior years and projects.
Meanwhile, actual annual spending on capital projects has settled in at $8 million to $12 million a year. Do the arithmetic and the picture is unambiguous: the CIP fund is being drained faster than it can be refilled.
The American Rescue Plan Act dollars (roughly $4.6 million in total) are spent. Post-COVID General Fund carryforwards have thinned. Vacancy savings (the money the city accidentally banks when jobs sit empty) are diminishing and, the report notes, "unreliable as a long-term strategy." Grants help, but most of them come with strings, deadlines, and eligibility rules that don't line up with what Hermosa actually needs to fix.
The single most consequential change in this year's CIP report is administrative rather than dramatic: the Pier replacement project, estimated at $58.6 million in 2032 dollars, has been formally added to the city's Deferred and Unfunded Future Projects list.
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That list (a running ledger of things the city wants or needs to do but has no money for) now totals between $89.96 million and $221.45 million. Add the $59.58 million of unfunded needs already baked into the five-year programmed CIP, and the city is looking at somewhere between roughly $148 million and $280 million in identified infrastructure work it cannot currently pay for.
The Pier itself is on a decision clock. At the March 24 council meeting, staff presented the full structural inspection report, which found the structure in "poor to serious" condition. A new pier would cost roughly $59 million but save the city more than $100 million in lifecycle costs over the long run. Because of the planning, environmental review, and permitting required, the replacement process takes six to eight years from decision to groundbreaking. To have a new pier by 2032, Council needs to give direction by the end of this year. To have one by 2036, by 2030 at the latest.
If Council punts, the city has to start reserving money in FY 2027-28 for the next mandatory round of repairs (already estimated at roughly $4 million) to be completed by 2030. The current round of high-priority repairs, budgeted at $3.7 million for FY 2026-27 and slated to begin construction as early as October, must finish by 2027 to keep the structure open.
Two new projects appear in next year's CIP, both driven by deferred maintenance: roof repairs at the Civic Center (City Hall and the Police Department), at $410,000, and roof repairs at the Lawn Bowling building at Clark Field, at $130,000.
Two projects are being moved off the active CIP onto the Deferred and Unfunded list:
The Comprehensive Downtown Lighting project. It had only $142,284 budgeted — enough for conceptual design but nowhere near enough to actually install anything. In its place, staff is proposing two cheaper, narrower line items. The first is a roughly $15,000 LED conversion for the 28 induction streetlights along Pier Avenue, where existing fixtures are essentially obsolete and replacement parts are hard to source. A test light is currently installed in front of Stecca Taverna at 439 Pier Avenue, with two more on order to evaluate color temperatures.
The second is roughly $14,000 to install year-round string lights on the palm trees in the Pier Avenue median — currently lit only during the holidays. Notably, staff floats the idea of doing this through a public-private partnership, "such as the Chamber of Commerce." Given the Chamber's well-documented financial difficulties, that suggestion is doing a lot of work in a single sentence.
The Tsunami Siren. Originally awarded a $75,000 FEMA grant (with a $25,000 city match) to install a warning siren at the Community Center, the project has been mugged by reality. Los Angeles County's BEELS (Beach Emergency Evacuation Lights System) deployment has no clear timeline. Installation at the Community Center alone would run more than $400,000, far beyond grant coverage. And the Community Center isn't actually the ideal location anyway, given its distance from the beach. An alternative three-siren beach system would cost about $160,000 but couldn't use the FEMA money. Staff recommends shelving the project and waiting on the County.
The projects that remain on the active CIP are, in many cases, only partially funded. Among the bigger increases requested for FY 2026-27:
The city's roads tell their own story. The pavement condition index (a standard 0 to 100 measure of road quality) has dropped from 70 in 2021 to 68 today. Staff says $3.1 million a year is the minimum needed just to hold the line. The Annual Street Improvements project alone is budgeted at $4.16 million for next fiscal year, and a new resurfacing project is recommended to start in FY 2027-28.
A separate item, the Vetter Windmill (removed from atop its wooden tower in July 2025 after a structural inspection identified the 1,800-pound assembly as a falling hazard) has been added to the Deferred and Unfunded list at an estimated $400,000 to $500,000 to restore. The windmill assembly itself dates to the early 1900s and could be refurbished, but the wooden structure and foundation would need full replacement.
Even if money materialized tomorrow, there is a second constraint: the people who would have to deliver the projects say that they are out of capacity.
Public Works' CIP workload is "completely full for the next two years," the report says, "with no capacity to take on new projects." The engineering division is carrying one vacancy. The operations and maintenance team handles 10 to 12 work orders a day on top of regular maintenance, special events, and what are euphemistically described as "infrastructure emergencies" — last year's list included emergency removal of 26 trees in city parks, a Valley Drive sinkhole, and the windmill itself.
Looming on the horizon: the City Yard relocation, online permitting rollout, major contract renegotiations for lifeguard services and beach maintenance, and significant third-party construction projects — Caltrans repaving PCH, Cal Water replacing water mains along Hermosa Avenue, and LA County Sanitation Districts rehabilitating sewers. All require city oversight. None of them appear in the CIP budget but all of them eat staff time.
The joint Parks and Public Works Commission meeting on May 5 is the first formal stop in a budget calendar that runs through late June.
The Commissions will be asked to weigh in on project sequencing, funding levels, and whether any of staff's recommendations — particularly the deferral of the lighting and siren projects — should be revisited.
The bigger conversation, though, is the one the staff report puts on the table without quite resolving: where the recurring money for capital infrastructure is going to come from. Hermosa Beach has spent the better part of a decade riding one-time windfalls. The pier is rusting. The roads are getting worse. The City Yard has, in SanClemente's phrasing, "far exceeded its useful life." And the cushion is gone.
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A $3.2 million structural deficit has been sitting under Hermosa Beach's budget for five years, masked by pandemic relief, vacancy savings, and unspent carryforward. With all three now exhausted, the council inherits a problem its predecessors chose to defer.
Council meeting opened by recognizing two pillars of the community — a gold-medal winning hockey coach and a century-old civic club — before working through a heavy agenda that included a contested fee study, Little League field improvements and police vehicle contracting.
City budget squeeze laid bare as council prepares to consider a series of difficult options to balance the books.
The first comprehensive update to Hermosa Beach's master fee schedule since 2016 would shift increased costs from taxpayers to applicants, with large hikes landing on developers, businesses and dispute filers.
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