PREPARED BY: KIERON SLAUGHTER DATE OF MEETING: 11/02/2026
SUBJECT:
TITLE
CONSIDER RESOLUTION OF THE CITY COUNCIL (1) AWARDING THE REQUEST FOR QUALIFICATIONS/PROPOSALS (RFQ/RFP) FOR REVOLVING LOAN FUND PROGRAM ADMINISTRATION TO WORKING SOLUTIONS CDFI; AND (2) AUTHORIZING THE CITY MANAGER TO EXECUTE A CONSULTING SERVICES AGREEMENT WITH WORKING SOLUTIONS CDFI FOR FIVE (5) YEARS TO ADMINISTER THE SMALL BUSINESS REVOLVING LOAN FUND SUPPORTED BY THE RETAIL CANNABIS COMMUNITY BENEFIT PROGRAM.
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
FY 2025-2027 Council Priority Workplan Compliance Statements:
Focus on Economic Development and Fiscal Diversification is a major policy goal contained in the FY 2025-27 City Council Priority Workplan.
CEQA Compliance Statement
The project is exempt from environmental review under the California Environmental Quality Act in accordance with CEQA Guidelines Section 15378(B)(5) because it can be seen with certainty that there is no potential for causing a significant effect on the environment since the project solely involves administrative activity and does not authorize any construction or development activities.
BACKGROUND
In 2025, the City began structuring a Retail Cannabis Community Benefit Program in coordination with its permitted cannabis operators. Each retailer agreed through a signed Memorandum of Understanding (MOU) to contribute 0.5% of gross sales toward a city specific community benefit fund with an additional 0.5% of funding provided to local non-profits serving residents, youth, and businesses in San Pablo. This fund will create a Small Business Revolving Loan Fund designed to support small business operators in the City of San Pablo who are unable to qualify for traditional financing. To date, City staff reports all MOUs have been executed and signed by all three (3) licensed and permitted cannabis retail operators in the City and received by the City prior to June 30, 2026.
The intent of the program is to use cannabis community benefit revenue to seed a locally focused Revolving Loan Fund, an economic development tool widely used to strengthen small business resiliency, retain local dollars, and expand access to capital for underserved entrepreneurs. This aligns with key goals in the City Council Priority Work Plan, including Enhance Community Resilience and Build a Healthy Community.
On June 1, 2026, the City released a Request for Qualifications and Proposals (RFQ/RFP) for a qualified Community Development Financial Institution (CDFI), consistent with procurement best practices. The program is expected to launch in 2027. The program is expected to operate for an initial five‑year period. Staff will provide annual reports to the City Council regarding fund performance, loan activity, and community impact. At the conclusion of the five‑year term, the City will evaluate the program’s effectiveness in partnership with the cannabis operators and determine whether to continue capitalizing the Revolving Loan Fund or redirect community‑benefit funding toward a revised benefit framework. The City received a total of two (2) proposals, with only one (1) being qualified. After review and interviews, staff has determined that Working Solutions CDFI best demonstrates the experience, expertise, and qualifications necessary to perform the services and requirements outlined in the RFQ/RFP. Attachment B is a copy of the proposed contract with Working Solutions, which incorporates the requirements set forth in their proposal.
DISCUSSION
Revolving Loan Funds (RLFs) are a proven economic development tool that expand access to capital for small businesses unable to secure traditional financing. A key advantage of an RLF is a self‑replenishing capital pool: as borrowers repay their loans, the funds are recycled and re‑loaned to new businesses, creating a sustainable and long‑term source of local investment.
RLFs also offer flexible financing tailored to local business needs. Eligible uses typically include façade improvements, equipment purchases, business acquisition, tenant improvements that all result in job retention or creation, all of which support San Pablo’s community resilience and economic‑vitality goals and may result in commercial corridor beautification.
The program will be administered by a qualified Community Development Financial Institution (CDFI) selected through the City’s competitive RFP process. CDFIs are specialized, mission‑driven financial institutions certified by the U.S. Treasury Department to provide fair, responsible financing in underserved and low‑income communities. They fill lending gaps left by mainstream financial institutions by offering loans, investments, and advisory services to small businesses, nonprofits, and community projects. CDFIs also provide technical assistance, helping borrowers strengthen business plans, manage finances, and improve long‑term viability.
While a CDFI may charge a modest administrative fee, contracting with a third‑party lender provides significant benefits: faster deployment of loan capital, professional underwriting, and the ability to accept digital and ACH loan payments, offering businesses a convenient and reliable method to service their debt. These operational advantages ensure that loan funds are delivered quickly and efficiently while reducing administrative burden on City staff.
Together, these features make an RLF a high‑impact, community‑focused tool that reinvests dollars locally, strengthens small businesses, and supports the City Council’s Priority Work Plan goals of Enhancing Community Resilience and Building a Healthy Community.
Working Solutions is proposing to use 5% of the annual 0.5% Retail Cannabis Community Benefit allocation to the Small Business Revolving Loan Fund to cover the administrative costs of setting up and managing the loan fund. This 5% will ensure that the organization can respond to quarterly and annual reporting and tracking requests. Working Solutions will use another 10% of the annual allocation to subsidize the interest fees generated so that these loans can be deployed at a 7% fixed interest rate. Working Solutions will use the subsidized amount and interest earned to cover the recurring servicing and technical assistance provided to borrowers. Borrowers will pay a closing fee of 5% to cover the underwriting and credit enhancement related expenses.
STANDING COMMITTEE REVIEW
The Economic Development, Housing & Project Management Standing Committee reviewed the Retail Cannabis Community Benefit Program, and the RLF concept on May 13, 2026. The program buildout is consistent with the City’s broader economic development strategy and provides a sustainable, community‑focused mechanism for reinvesting local cannabis revenue back into San Pablo’s small business ecosystem. A program informational update was also provided to the EDHPM Standing Committee on July 8, 2026.
FISCAL IMPACT
Based on the Cannabis Operators Community Benefit Program MOUs, each cannabis retailer contributes 0.5% of annual gross sales to the City’s Business Revolving Loan Fund 224. The exact annual fiscal impact depends on the performance of each operator. Although sales vary by operator, staff anticipates approximately $50,000-$100,000 annually with increased revenue year over year as each retailer gets established and gains recognition in the marketplace.
ATTACHMENTS:
Att A. Resolution
Att B. Working Solutions CDFI Contract to administer the Retail Cannabis Community Benefit Small Business Revolving Loan Fund