Avalon City Council
March 21, 2023

AVALON CITY COUNCIL MEETING
TUESDAY, MARCH 21, 2023—4:00 P.M.

SPECIAL JOINT CITY COUNCIL I PLANNING COMMISSION MEETING WILL FOLLOW AT 5:00 P.M.
410 AVALON CANYON ROAD
THIS VIRTUAL MEETING IS HELD PURSUANT TO AS 361
AGENDA
In compliance with the Americans with Disability Act. if you need special assistance to participate in this meeting, please contact the City Clerk’s Office (310) 510-0220. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35. 102-

35.104 ADA Title II). All public records relating to an agenda item on this agenda are available for the public inspection at the time the records are distributed to all, or a majority of all, members of the City Council. Such records shall be available at City Hall located at 410 Avalon Canyon Rd.

PRIOR TO THE SPECIAL JOINT MEETING OF THE CITY COUNCIL AND PLANNING COMMISSION THERE WILL BE A REGULAR CITY COUNCIL MEETING STARTING AT 4:00 P.M. IN THE CITY COUNCIL CHAMERS.

Due to social distancing recommendations from the Center for Disease Control and State of California Division of Occupational Safety and Health (Cal/OSHA) and the County of Los Angeles, and pursuant to findings made under AB 361, the CITY OF AVALON’S CITY COUNCIL SHALL GENERALLY BE AVAILABLE TO THE PUBLIC REMOTELY. The general public may attend the meeting in the Council Chambers however must adhere to social distancing requirements. The public is encouraged to watch and participate from the safety of their homes while practicing social distancing.

Council Chambers are open to a maximum 30 members of the general public. Once the Council Chambers reach maximum occupancy, the general public may participate in Oral Communication and address the City Council on an agenda item in person by waiting in the City Hall Court Yard and entering the Chambers one at a time at the appropriate time. No one will be admitted into the Council Chambers who is ill or exhibiting symptoms of COVID-19. Additionally, the general public may participate in Oral Communication and address the City Council on an agenda items by providing comments via Zoom or by sending comments to askcityofavalon .com.

For the public’s convenience, but not participation, the meeting can be viewed:

On local cable: Catalina Broadband Solutions channel 3
Streaming Online: www.cityofavalon.com/meetinQs *Streaming on Facebook Live: www.facebook.com/CityOfAvalonOfficial Streaming on YouTube: https://www.youtube.com/CityofAvalonCA

FOR REMOTE PUBLIC PARTICIPATION
1) Join the Meeting via Phone Conference (Voice Only):

Phone Number: (669) 444-9171,
Meeting ID: 857 7294 8220

JOINT MEETING
MARCH 21, 2023
PAGE 2
When you would like to comment during the meeting enter *9 on the phones key pad to activate the “raise hand” button at the time the Agenda Item is being presented for City Councilconsideration.

CALL TO ORDER I PLEDGE OF ALLEGIANCE I INVOCATION I ROLL CALL

ANNOUNCEMENTS I WRITTEN COMMUNICATIONS

DEPARTMENT HEAD REPORTS

CITY MANAGER REPORT I CITY ATTORNEY REPORT

COUNCILMEMBER REPORTS I MAYOR REPORT

ORAL COMMUNICATION
Members of the public may address the City Council at this time. No action will be taken on nonagenda items at this meeting. Speakers should limit comments to two (2) minutes each.

PRESENTATION — Eric O’Donnell, Deputy Director of Townsend Public Affairs, will provide a legislative update.

CONSENT CALENDAR

1. Minutes
Although the live recording is the official record of public meetings, actions are prepared for the Council’s approval.

Recommended Action
Approve minutes from the March 7, 2023 regular City Council Meeting.

2. Warrants
Expenditures Submitted for Approval
o Warrants in the amount of $740,484.29.o One payroll in the amount of $202,782.84. o Two electronic fund transfers totaling $8481 1.90.

Recommended Action
Approve the total expenditures for February 27, 2023 through March 10, 2023 totaling $1,028,079.03.

3. Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022 The Annual Comprehensive Financial Report is a set of government financial statements that comply with the accounting requirements established by the GovernmentalAccounting Standards Board. The City’s financial statements were audited by Davis Farr LLP, an independent public accounting firm of licensed certified public accountants.Recommended Action Receive and file the Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022.

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MARCH 21, 2023
PAGE3

4. Cybersecurity Policy
The City of Avalon Cybersecurity Policy was developed to support, maintain, and secure the City's critical Information Technology Resources, infrastructure and data systems.

Recommended Action
Adopt the City of Avalon Cybersecurity Policy by resolution and authorize the City Manager or their designee to amend the plan as necessary.

5. Award On-Call Planning Consultant Contract
The City of Avalon is in need of technical planning and environmental review expertise.

A job posting for a vacant Planning Director position has been advertised since May 2022; however, the City has not been able to identify a suitable candidate.

Recommended Action
Authorize the City Manager or his designee to contract an on-call Planning Consultant for annual cumulative total not to exceed $125,000.00.

GENERAL BUSINESS

6. Improvements to the Green Pleasure Pier
The Harbor Master Building, located at 22 Green Pleasure Pier, is in need of significant exterior repair. With the summer season approaching, time is of the essence to complete this project so as not to negatively impact visitors, overall harbor congestion, or businesses located on the Green Pleasure Pier.

Recommended Action

1.) Authorize the City Manager to award a contract to the most responsive bidder for a not to exceed amount of $90,000 to paint the Green Pleasure Pier Harbormaster Building.

2.) Approve a budget amendment of $38,000 to account number 10470-6547.

7. Phased Procurement for Underground Fuel Tank Replacement Project The State of California requires the owners or operators of specific types of underground fuel storage tanks to permanently close by December 31, 2025. The City of Avalon owns four underground fuel tanks at the Avalon Fuel Dock that fall under this requirement. The City was awarded a $500,000 grant through the State of California Water Resources Control Board assist with this project. The granting agreement requires the City to complete the project by November 2023.

Recommended Action

1.) Approve of the construction documents for the Underground Fuel Tank Replacement Project. 2.) Authorize the City Manager or his designee to procure the replacement fuel tank and award a contract for a not-to-exceed sum of $200,000 to the most responsive bidder. 3) Authorize the City Manager or his designee to circulate a request for proposals from qualified firms to construct the retaining wall and foundational slab for the new fuel tanks.

8. State of Emergency Proclamation for the "2023 Atmospheric River Incidents" Due to a series of natural phenomena called "Atmospheric Rivers," the City has received an unprecedented amount of precipitation and an increased number of wind events. The

JOINT MEETING
MARCH 21, 2023
PAGE 4
weather conditions have led to flooding, infrastructure failures, increase rock falls and mud slides along Pebbly Beach Road, Roaring Canyon, and St. Catherine’s Way, the appearance of sink holes along the roadways, and damage to City parks and facilities.

Recommended Action
Adopt a resolution making the appropriate findings and declare a Local State of Emergency due to the damages from severe rain and winds to the City of Avalon.

9. Authorize EmerQency Wall Repair Contract for repairs at Crescent Avenue Stairway During the March 21, 2023 regular City Council Meeting, the City Council will adopt a resolution to make the appropriate findings to declare a local state of emergency due to the damage caused by severe rain and winds. During the recent Atmospheric River Incidents, the hillside beneath the Crescent Avenue Stairway began to further erode. An assessment has determined that corrective action must be taken immediately. With proposals from qualified firms in hand, City Staff request authorization for the City Manager or his designee to negotiate and award a contract for a not to exceed $300000 to make repairs.

Recommended Action(1) Make a finding that emergency measures must be implemented to protect from economic loss of both City property and the adjoining private property, as well as reduce the hazardous conditions from a landslide below the Crescent Avenue Stairway. (2) Make a finding that due to the need to respond with a highly qualified contractor relative to the work scope that public bidding is inefficient with this specific work scope and should be dispensed with. (3) Authorize the City Manager or his designee to negotiate and award aconstruction contract for a not to exceed $300,000 to complete the work.

CALL TO ORDER JOINT SESSION OF CITY COUNCIL AND PLANNING COMMISSION The following General Business item will be the City Council and Planning Commission

10. Transient Rental Study Session
Recommended ActionHear the presentations provided by City Staff. Provide direction, if necessary.

ADJOURN

NOTICE OF POSTING
I, Devin Elise Hart, declare that the City Council Agenda for Tuesday, March 21, 2023 was posted on Friday, March 17, 2023 on the City’s website www.cityofavalon.com, and at City Hall, 410 Avalon Canyon Road.

OLZ o±
Devin Elise Hart, Management Analyst

CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM: 1
ORIGINATING DEP: City Clerk CITY MANAGER:__________
PREPARED BY: Gabrielle Morones, Deputy City Clerk
SUBJECT: City Council Minutes
RECOMMENDED ACTION(S): Approve minutes from the March 7, 2023 regular City Council Meeting.

REPORT SUMMARY: Although the live recording is the official record of public meetings, minutes are prepared for the Council’s approval.

FISCAL IMPACTS: N/A.

GOAL ALIGNMENT: Not Aligned.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: N/A.

FOLLOW UP ACTION: File minutes in the City Clerk’s office.

ADVERTISING, NOTICE AND PUBLIC CONTACT: The item was properly listed onthe posted agenda pursuant to the Brown Act.

ATTACHMENTS:
. March 7, 2023 Minutes

AVALON CITY COUNCIL MEETING
TUESDAY, MARCH 7, 2023 — 5:00 P.M.

THIS VIRTUAL MEETING IS HELD PURSUANT TO AS 361

MINUTES
Due to social distancing recommendations from the Center for Disease Control and State of California Division of Occupational Safety and Health (Cal/OSHA) and the County of Los Angeles, and pursuant to findings made under AB 361! the CITY OF AVALON’S CITY COUNCIL SHALL GENERALLY BE AVAILABLE TO THE PUBLIC REMOTELY. The general public may attend the meeting in the Council Chambers however must adhere to social distancing requirements. The public is encouraged to watch and participate from the safety of their homes while practicing social distancing.

Council Chambers are open to a maximum 30 members of the general public. Once theCouncil Chambers reach maximum occupancy, the general public may participate in Oral Communication and address the City Council on an agenda item in person by waiting in the City Hall Court Yard and entering the Chambers one at a time at the appropriate time. No one will be admitted into the Council Chambers who is ill or exhibiting symptoms of COVID-19.

Additionally, the general public may participate in Oral Communication and address the City Council on an agenda items by providing comments via Zoom or by sending comments to askcityofavalon.com.

CALL TO ORDER-5:00 p.m.

ROLL CALL- Present via Teleconference and In-Person: Mayor Anni Marshall, Councilmembers Yesenia De La Rosa, Lisa Lavelle, Michael Ponce and Mary Schickling. Also present: BB&K Attorney Mehssa Crosswaite, City Manager David Maistros and Deputy City Clerk Gabrielle Morones.

WRITTEN COMMUNICATIONS-None.

PRESENTATION — Finance Director Matthew Baker presented the FY 2021-2022 Annual Comprehensive Financial Report audited by Davis Farr LLP.

CONSENT CALENDAR-There were 6 Items on the Consent Calendar. Motion to approve Items 1-6 made by Mary Schickling, seconded by Lisa Lavelle. (All Ayes)

1. Minutes
Approved minutes from the February 7, 2023 and February 21, 2023 regular City Council Meetings.

2. Warrants
Approved warrants in the amount of $1,028,075.87, one payrofl in the amount of $207,316.18. four electronic fund transfers totaling $135,165.52 for a total of $1,370,577.57 for February 13, 2023 through February 24, 2023.

CITY COUNCIL MINUTES
MARCH 7, 2023PAGE 2

3. Findings to Continue to Hold Remote TeleconferenceNirtual City Council Meetings Pursuant to Assembly Bill 361
Reconsidered the circumstances of COVID-19 state of emergency proclaimed by the Governor and COVID-19’s continued impact and determined that state or local officials have imposed or recommended measures to promote social distancing in connection with COVID-19, and as such, that continuing to utilize the protections of Assembly Bill 361 will protect the health and safety of attendees.

4. Membership in the Gateway Cities Affordable Housing Trust, a Joint Powers Authority

1. Adopted Resolution No. 23-04 of the City Council of the City of Avalon, California, Approving, Authorizing and Directing City Execution of the Joint Exercise of Powers Agreement Relating to Membership in the Gateway Cities Affordable Housing Trust.

2. Authorized the City Manager to execute the Gateway Cities Affordable Housing Trust Joint Powers Authority (JPA) Agreement.

5. Surplus and Excess Land Inventory Report
Adopted Resolutions No. 23-05 of the City Council of the City of Avalon Adopting an Inventory Report of the City’s Surplus and Excess Land, Pursuant to Government Code Section 54230.

6. Island Express Helicopter Services, Inc. Lease Transfer Authorized the City Manager to amend and transfer the lease with Island Express Helicopter Services, lnc, for the city-owned property at 300-C Pebbly Beach Road, to Maverick Express, LLC. Authorized the City Manager use his discretionary authority to assess a Transfer Fee as established in the lease agreement.

GENERAL BUSINESS

7. Federal Emergency Management Agency Staffing for Adequate Fire and Emergency Response Grant
Authorized the City Manager or his designee to submit an application for the Federal Emergency Management Agency Staffing for Adequate Fire and Emergency Response Grant.

Motion to approve made by Michael Ponce, seconded by Yesenia De La Rosa. (All Ayes)
Mayor Marshall adjourned the meeting at 6:14 p.m.

I, Gabrielle Morones, Deputy City Clerk, do hereby certify that the DVD videotape of the Regular City Council Meeting on March 7, 2023, is the official record of the Council Meeting and is on file and maintained in City Hall.Gabrielle Morones, Deputy City Clerk! Sr. Administrative Assistant

CITY OF AVALON CITY COUNCIL
MEETINGDATE: March2l,2023 AGENDAITEM: 2
ORIGINATING DEP: Finance CITY MANAGER:

PREPARED BY: Matthew Baker, Finance Director
SUBJECT: WarrantsRECOMMENDED ACTION(S): Approve the total expenditures for February 27, 2023 throughMarch 10, 2023 totaling $1,028,079.03.REPORT SUMMARY: These disbursements through March 10th are comprised of warrants totaling $740484.29, one payroll totaling $202,782.84, and other electronic fund transferstotaling $84,811.90.

ITEM DESCRIPTION AMOUNT — DATE
GF US BANK WARRANTS CK# 35660- 35717 $ 740,484.29 03/03/23 PAYROLL 202,782.84 03/10/23EFT -CALPERS MEDICAL 83,577.29 03/02/23EFT - HARBOR/REC CREDIT CARD AND BANK SERVICE FEES 1,234.61 03/10/23 TOTAL DISBURSEMENTS $ 1,028,079.03
GOAL ALIGNMENT: Ongoing meeting of City obligations.

FISCAL IMPACTS: There are sufficient funds available, and the expenditures are included in the FY22-23 Budget.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: N/A
FOLLOW UP ACTION: N/A
ADVERTISING, NOTICE AND PUBLIC CONTACT: Pursuant to the Brown Act.

ATTACHMENTS: Audit Certificate, Warrant List, US Bank Credit Card Detail

CITY OF AVALON
FEBRUARY 27, 2023- MARCH 10, 2023 DISBURSEMENTS
March 21, 2023

ITEM DESCRIPTION AMOUNT DATE
CF US BANK WARRANTS CK# 35660 -35717 $ 740,484.29 03/03/23PAYROLL 202,782.84 03/10/23EFT -CALPERS MEDICAL 83,577.29 03/02/23EFT -HARBOR/REC CREDIT CARD AND BANK SERVICE FEES 1,234.61 03/10/23 TOTAL DISBURSEMENTS $ 1,028,07903

CERTIFICATE
IN ACCORDANCE WITH SECTION 32702OF THE GOVERNMENT CODE, I CERTIFY

THATTHE ABOVE DEMANDS ARE ACCURATEAND THAT FUNDS ARE AVAILABLE FOR PAYMENT.

APPROVED AND AUDITED THIS
21ST DAY OF MARCH 2023 I CERTIFY UNDER PENALTY OF PERJURY THAT THE FOREGOING IS TRUE ANDCORRECT.

AUDIT COMMITTEE - LISA LAVELLE EXECUTED THIS 21ST DAY OF MARCH 2023AUDIT COMMITTEE -MARY SCHICKLING FINANCE DIRECTOR -MAT[HEW BAKER

CITY OF AVALON
FEBRUARY 27, 2023 - MARCH 10, 2023 DISBURSEMENTS
March 21, 2023
AAA OIL INCAMAZON CAPITAL SERVICES, INC.AMERGENTTECHS, INC ORIGINAL ANTONIO’S PIZZERIA INCAT & TAVALON FREIGHT SERVICES, LLC

BEST, BEST & KRIEGER, LLP

BOUND TREE MEDICALBOYD, RAY
CANBY MARINE & REFRIGERATION CO.CATALINA BEVERAGE COCATALINA BROADBAND SOLUTIONS

CATALINA ISLAND COMPANYCATALINA ISLAND JANITORIAL
CATALINA ISLANDERCATALINA PEST CONTROLCO. OF LOS ANGELES SHERIFF’S DEPT.COUNTY OF LOS ANGELES FIRE DEPT

DAPEER, ROSENBLIT & LITVAK,LLP
DELTA DENTALDEWEY PEST CONTROLOION & SONS MARINE FUELS INCFINELINE CONSTRUCTIONGALLS, LLCGLENN E THOMAS DODGEGRAINGEREAAKERHARRY’S MARINE SERVICE, LLC

IDR ENVIRONMENTAL SERVICES
JORDAHI. CONSTRUCTION
KATIES KITCHENKNOPPER, BRUCEINNOVATIVE ENGINEERING & MAINTENANCMANAGED HEALTH NETWORKMARINE DIESEL SERVICES, INC.MASAMATTHEWS INTERNATONAL CORPORATION MCMASTER-CARRMOEEATT & NICHOLMONTROSE ENVIRONMENTAL SOLUTIONSMRC SMART TECHNOLOGY SOLUTIONSORIGINAL ;ACKS RESTAURANT & BAKERY

NAPA AUTO PARTS
QUAOIENTQUILL CORPRICOH AMERICAS CORPRICOH USA, INC.SIRIA’S CLEANING SERVICE

DESCRIPTION

FUEL - ALL DEPARTMENTS

SUPPLIES -ALL DEPARTMENTSSUPPLIES -HARBOR
SENIOR MEALS - 12/2022, 01/2023COMMUNICATIONS - ALL DEPARTMENTS FREIGHT - ALL DEPARTMENTSLEGAL FEES - 01/2023

SUPPLIES - FIRE

VOID CHECK

SERVICE - HARBORSUPPLIES-ALL DEPARTMENTS

INTERNET - ALL DEPARTMENTS
SERVICE- P/w, PARCELS -FY23SERVICE- ADMINISTRATION

ADVERTISING - ALL DEPARTMENTS

SERVICE - HARBORRESIDENT DEPUTY
- 01/23, WATERFRONT PTRLO9/22. 01/23
QUARTERLY PAYMENTS - PARAMEDiCS

SERVICE - VEHICLES
DENTAL - 03/2023

SERVICE - HARBOR

FUEL -HARBOR

SERVICE -HARBOR

UNIFORMS -HARBOR

SUPPLIES -GARAGESUPPLIES -HARBORSUPPLIES - PUBLIC WORKSSERVICE -HARBOR

HHW DISPOSAL
SERVICE -HARBORSENIOR MEALS - 10/2022SERVICE - ADMINISTRATIONSUPPLIES - HARBORSERVICE - ADMINISTRATION

SUPPLIES - HARBOR
DUES - 03/2023

SUPPLIES - CEMETERYSUPPLIES -HARBORSERVICE -PLANNING
MAINTENANCE -10/22, CONTRACT SERVICES- 12/22
SUPPLIES - ADMINISTRATIONSENIOR MEALS - 12/2022, 01/2023SUPPLIES - GARAGE

POSTAGE REFILL

SUPPLIES - ALL DEPARTMENTS
COPIER LEASE - PLANNINGCOPIER LEASE - PLANNING2ND HALF 02/2023

AMOUNT NAME

CHECK DATE

NUMBER ISSUED
35660 3/3/2023 4,263.6735661 3/3/2023 6,278.6035662 3/3/2023 2121.3335663 3/3/2023 8280035664 3/3/2023 1,37892 35665 3/3/2023 3,5316435666 3/3/2023 10,8908635667 3/3/2023 495035668 3/3/2023 1,3178235669 3/3/2023 1,S184735670 3/3/2023 2,D8SAa35671 3/3/2023 2,1148035672 3/3/2023 8,466.5635673 3/3/2023 75.00 35674 3/3/2013 495.0035675 3/3/2023 496.0035676 3/3/2023 141,675.66 35677 3/3/2023 231,277.25
35678 3/3/2023 2,316.0035679 3/3/2023 6,770.32
35680 3/3/2023 60.0035681 3/3/2023 631.4635682 3/3/2023 780.00 35683 3/3/2023 88.5635684 3/3/2023 1,200.623S685 3/3/2023 61.57 3S686 3/3/2023 368.283S687 3/3/2023 46,666.343S68B 3/3/2023 40,058.0335689 3/3/2023 2,761.5033690 3/3/2023 441.0035691 3/3/2023 995.0033692 3/3/2023 1)680.0033693 3/3/2023 286.0035694 3/3/2023 1,314.0235695 3/3/2023 951.00 35696 3/3/2023 274.aB35697 3/3/2023 1,778.0233698 3/3/2023 2,287.0033699 3/3/2023 135,638.1233700 3/3/2023 38 2333701 3/3/2023 7260035702 3/3/2023 56505635703 3/3/2023 38461 35704 3/3/2023 8032335705 3/3/2023 9543635706 3/3/2023 423.4835707 3/3/2023 9,352.91

CITY OF AVALON
FEBRUARY 21, 2023- MARCH 10, 2023 DISBURSEMENTS
March 21, 2023

CHECK DATE

NUMBER ISSUED AMOUNT NAME DESCRIPTION
35708 3/3/2023 9,357.91 SIRIA’S CLEANING SERVICE 1ST HALF 03/202335709 3/3/2023 620.61 SOUTH COAST AQMD PERMIT FEES -FIRE35710 3/3/2023 1,205.89 STANDARD INSURANCE COMPANY LIFE INSURANCE -03/202335711 3/3/2023 5,468.80 SUPERION, LLC SOFTWARE LEASE - FINANCE35712 3/3/2023 1,3SD U0 TRILLIUM SOLUTIONS INC SOFTWARE LEASE -ADMINISTRATION 35713 3/3/2023 3,381.21 ULINE SUPPLIES -PUBLIC WORKS35714 3/3/2023 - CORPORATE PAYMENT SYSTEMS VOID - MULTI STUR CHECK35715 3/3/2023 14,544.66 CORPORATE PAYMENT SYSTEMS SEE ATTACHED DETAIL35716 3/3/2023 222.51 WEST MARINE PRO SUPPLIES -HARBOR35717 3/3/2023 S,7fl.85 WESTRIDGE ENVIRONMENTAL GROUP SUPPLIES - WWTP $ 740,48429

CITY OF AVALON
US BANK CREDIT CARD CHARGES PAID MARCH 3,2023
March 21, 2023

LAST NAME POST DATE AMT USD VENDOR DESCRIPTION DEPARTMENT HERNANDEZ 1/19/2023 4910 PEBBLY BEACH BUILDING SUPPLY HARBOR MAINTENANCE SUPPLIES PUBLIC WORKSIIERNANDE? 1/25/2023 10101 AVALON GAS STATION FUEL PUBLIC WORKS HERNANDEZ 1/27/2023 5127 AVALON GAS STATION FUEL PUBLIC WORKS HERNANDEZ 1/27/2023 903 AVALON GAS STATION FUEL PUBLIC WORKS HERNANDE7 1/30/2023 93.74 AVALON GAS STATION FUEL PUBLIC WORKS HERNANDEZ 1/31/2U23 425.22 TRAILER PARTS SUPERSTORE GARAGE SUPPLIES PUBLIC WORKSHERNANDE? 2/1/2023 69.17 CHET’S HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKSHERNANDEZ 2/1/2023 24.17 CHETS HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKSHERNANDE? 2/2/2023 76.20 PEBBLY BEACH BUILDING SUPPLY PUMP OUT FLOAT MAINTENANCE PUBLIC WORKSHERNANDEZ 2/3/2023 26.65 CHETS HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKS HERNANDEZ 2/3/2023 200.00 AVALON GAS STATION FUEL PUBLIC WORKS HERNANDEZ 2/2/2023 67.08 CHEIS HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKSHMIELAK 1/17/2023 469.25 PEBBLY BEACH BUILDING SUPPLY SAND BANGS PUBLIC WORKS HMIELAK 1/20/2023 57.88 CHETS HARDWARE PUMP OUT FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 1/24/2023 1,082.72 NW PUMP & EQUIPMENT FUEL PUMP PARTS PUBLIC WORKSHMIELAK 1/26/2023 81.04 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 1/27/2023 18.24 CHET’S HARDWARE FUEL PUMP PARTS PUBLIC WORKSHMIELAK 1/27/2023 62.53 AVALON GAS STATION FUEL PUBLIC WORKS HMIELAK 1/30/2023 111.07 CATALINA CANYON INN LODGING PUBLIC WORKSHMIELAI< 1/30/2023 21.68 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAI< 1/30/2023 97.98 AVALON GAS STATION FUEL PUBLIC WORKS HMIELAK 2/1/2023 85.12 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAI< 2/1/2023 76.16 PEBBLY BEACH BUILDING SUPPLY PUMP OUT FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 2/2/2023 29.69 CHET’S HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKSHMIELAK 2/2/2023 200.00 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/2/2023 17.76 AVALON GAS STATION FUEL PUBLIC WORKS HMIELAK 2/2/2023 116.21 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/2/2023 75.05 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/2/2023 60.05 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/3/2023 75.90 CHECS HARDWARE PUMP OUT FLOAT MAINTENANCE PUBLIC WORKS HMIELAK 2/6/2023 56.05 CHET’S HARDWARE FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 2/6/2023 32.98 CHETS HARDWARE FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 2/6/2023 6.01 CHET’S HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKSHMIELAK 2/6/2023 82.03 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/6/2022 358.55 A-Z BUS SALES TRANSIT FLEET MAINTENANCE PUBLIC WORKS HMIELAK 2/6/2023 33.57 PEBBLY BEACH BUILDING SUPPLY PUMP OUT FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 2/9/2023 18.13 CHET’S HARDWARE PUMP OUT FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 2/9/2023 30.77 CHET’S HARDWARE PUMP OUT FLOAT MAINTENANCE PUBLIC WORKSHMIELAK 2/9/2023 20.89 CHET’S HARDWARE MAINTEANCE SUPPLIES PUBLIC WORKS HMIELAK 2/9/2023 625.00 CALCITIES REGISTRATION TRAINING PUBLIC WORKSHMIELAK 2/10/2023 65.30 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/10/2023 123.49 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAI< 2/10/2023 72.51 AVALON GAS STATION FUEL PUBLIC WORKS HMIELAI< 2/10/2023 75.14 AVALON GAS STATION FUEL PUBLIC WORKSHMIELAK 2/13/2023 46.48 CHETS HARDWARE FLOAT MAINTENANCE PUBLIC WORKSGREENLAW 1/25/2023 1,290.56 PLANT CLEARANCE INC. MAINTEANCE SUPPLIES PUBLIC WORKSHART 1/18/2023 421.00 BROADCAST MUSIC LICENSING RECREATIONHART 1/20/2023 550.00 CA PARK & REC SOCIETY TRAINING RECREATION HART 1/25/2023 20.00 FREEONLINESURVEYS.COM SERVICE RECREATION HART 1/26/2023 15.39 CHET’S HARDWARE TREMONT HALL MAINTENANCE RECREATIONHART 1/26/2023 140.34 AVALON GAS STATION FUEL RECREATIONHART 1/30/2023 23.74 CHET’S HARDWARE MAINTEANCE SUPPLIES RECREATONHART 2/3/2023 98.20 AVALON GAS STATION FUEL RECREATON HART 2/6/2023 24.75 AVALON GAS STATION FUEL RECREATIONHART 2/13/2023 26.36 CHET’S HARDWARE MAINTENANCE SUPPLIES RECREATIONHART 2/13/2023 100.44 VONS PRIME TIMERS RECREATION HART 2/13/2023 13.50 VONS PRIME TIMERS RECREATIONHART 2/13/2023 102.65 AVALON GAS STATION FUEL RECREATION

CITY OF AVA ION
US BANK CREDIT CARD CHARGES PAID MARCH 3,2023
March 21, 2023
LAST NAME POST DATE AMT USD VENDOR DESCRIPTION DEPARTMENTCAMPBELL 1/18/2023 104.00 SENDHUB COMMUNICATIONS HUMAN RESOURCES CAMPBELL 1/23/2023 404.48 HILTON HOTEL SAN DIEGO LODGING HUMAN RESOURCESCAMPBELL 1/26/2023 12.00 GOODHIRE.COM EMPLOYEE SCREENING HUMAN RESOURCES CAMPBELL 1/26/2023 214.92 G000HIRE.COM EMPLOYEE SCREENING HUMAN RESOURCESCAMPBELL 2/1/2023 (14.99) G000HIRECOM CREDIT HUMAN RESOURCESGONZALES 1/24/2023 18.67 AMAZON.COM OFFICE SUPPLIES FINANCEGONZALES 1/31/2023 625.00 CALACT TRAINING FINANCEGONZALES 2/1/2023 217.97 SOUTHWESTAIRLINES TRAVEL FINANCEGONZALES 2/1/2023 669.81 HYATT SQUAW CREEK LODGING FINANCE BAKER 2/2/2023 83.50 CATALINA EXPRESS TRAVEL FINANCEBAKER 2/6/2023 929.68 THE EXHANGE SACRAMENTO LODGING FINANCEBAKER 2/13/2023 S9.86 AVERY PRODUCTS OFFICE SUPPLIES FINANCE RADDE 2/2/2023 8296 CYBERLYNK NETWORK IT SUBSCRIPTION ADMINISTRATION RADDF 2/3/2023 26.08 VAST CONFERENCE COMMUNICATIONS ADMINISTRATION HART 2/8/2023 11940 WINHOST,COM DOMAIN PAYMENT ADMINISTRATIONMORONES 1/23/2023 9.89 AMAZONCOM TRAiNING MATERIALS ADMINISTRATION ALEGRIA 1/27/2023 65.00 SOCAL FIRE PREVENTION TRAINING FIREALEGRIA 1/30/2023 169.00 BUFFALO NICKEL RESTAURANT MEETING SUPPLIES FIREALEGRIA 1/30/2023 18600 AVALON GAS STATION FUEL FIREALEGRIA 1/31/2023 19.13 DOLLAR TREE MEETING SUPPLIES FIREALEGR’A 1/31/2023 11695 COSTCO MEETING SUPPLIES FIREALEGRIA 2/2/2023 38.29 VONS MEETING SUPPLIES FIREALEGRIA 2/2/2023 81.62 AVALON GAS STATION FUEL FIREALEGRIA 2/3/2023 (96-96) COSTCO CREDIT FIRE ALEGRIA 2/6/2023 65.00 SOCAL FIRE PREVENTION TRAINING FIREALEGRIA 2/8/2023 87.48 AVALON GAS STATION FUEL FIREALEGRIA 2/9/2023 60.00 SOCAL FIRE PREVENTION TRAINING FIREALEGRIA 2/9/2023 180.00 SOCAL FIRE PREVENTION TRAINING FIREALEGRIA 2/9/2023 84.00 AVALON GAS STATION FUEL FIREALEGRIA 2/10/2023 (6500) SOCAL FIRE PREVENTION CREDIT FIREALEGRIA 2/10/2023 63.83 THE SAND TRAP MEETING SUPPLIES FIREALEGRIA 2/13/2023 83.S0 CATALINA EXPRESS TRAVEL FIREALEGRIA 2/13/2023 59.38 BROPHY BROS. TRAVEL FIREALEGRIA 2/14/2023 4438 THE LUCKY PENNY TRAVEL FIRE ALEGRIA 2/14/2023 162.00 HUBCAP ZONE TRAVEL FIREALEGRIA 2/14/2023 730.00 CFPI.ORG TRAINING FIREALEGRIA 2/14/2023 82.97 AVALON GAS STATION FUEL FIREALEGRIA 2/14/2023 89.00 AVALON GAS STATION FUEL FIREALEGRIA 2/15/2023 4.00 MASON BEACH INN LODGING FIREALEGRIA 2/15/2023 267.06 MASON BEACH INN LODGING FIRE $ 14,544.66

CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM:
3 ORIGINATING DEP: Finance CITY MANAGER: OJ’tUR
PREPARED BY: Matthew Baker, Finance Director
SUBJECT: Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022
RECOMMENDED ACTION(S): Receive and file the Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022.

REPORT SUMMARY: The Annual Comprehensive Financial Report (ACFR) is a set of
government financial statements that comply with the accounting requirements established by the Governmental Accounting Standards Board (GASB). The City’s financial statements were audited by Davis Fan LLP, an independent public accounting firm of licensed certified public accountants. The goal of the audit was to provide reasonable assurance that the financialstatements of the City are free of material misstatement. The independent audit involved examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. For the fiscal year ended June 30, 2022, the independent auditor issued an unmodified opinion that the financial statements are presented fairly, in all material respects, in accordance with generally accepted accounting principles.

The ACFR is presented in three sections: introductory, financial, and statistical. The introductory section includes the letter of transmittal and organizational chart. The financial section includes the Independent Auditor’s Report, Management’s Discussion and Analysis (MD&A), the basic financial statements, Required Supplementary Information, and other information. The MD&A contains
a narrative introduction, overview, and analysis of the City’s financial statements. It should be read in conjunction with the letter of transmittal. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. In
contrast to the financial section information, the statistical information has not been audited.

The independent audit of financial statements was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal granting agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal reports. The Single Audit is still ongoing and is anticipated to be completed by the end of the month. Staff will communicate any findings. should they occur, to the City Council at a future meeting.

GOAL ALIGNMENT: Transparency
FISCAL IMPACTS: N/A.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: N/A.

FOLLOW UP ACTION: N/A.

ADVERTISING, NOTICE AND PUBLIC CONTACT: Pursuant to the Brown Act.

ATTACHMENTS:

1. Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022

CITY OF AVALON, CALIFORNIA
Basic Financial Statements
Year ended June 30, 2022

CITY OF AVALON
Basic Financial Statements and Supplemental Data
Year ended June 30, 2022

TABLE OF CONTENTS
Page
Number
Introductory Section:

Letter of Transmittal
Organization Chart vi
List of Elected and Appointed Officials vii
Financial Section:

Independent Auditor’s Report 1
Management’s Discussion and Analysis 5
Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position 21
Statement of Activities 22
Fund Financial Statements:

Governmental Funds:

Balance Sheet 25Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 27
Statement of Revenues, Expenditures and Changes in Fund Balances 28 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 30 Proprietary Funds:

Statement of Net Position 32Statement of Revenues, Expenses and Changes in Net Position 34Statement of Cash Flows 36 Private Purpose Trust Fund:

Statement of Fiduciary Net Position 38Statement of Changes in Fiduciary Net Position 39 Notes to the Financial Statements 40
Required Supplementary Information:

Pension Plans:

Miscellaneous Plan:

Schedule of the Plan’s Proportionate Share of the Net Pension Liability 80Schedule of Plan Contributions 82 Safety Plan:

Schedule of the Plan’s Proportionate Share of the Net Pension Liability 84Schedule of Plan Contributions 86 Schedule of Changes in Total OPEB Liability and Related Ratios 88Schedule of OPEB Contributions 89

CITY OF AVALON
Basic Financial Statements and Supplemental Data
Year ended June 30, 2022

TABLE OF CONTENTS
(CONTINUED)
Page
Number
Budget to Actual Schedules:

General Fund 90
Local Transportation Special Revenue Fund 91
Avalon Housing Authority Special Revenue Fund 92
Notes to Required Supplementary Information 93
Other Information:

Combining and Individual Fund Financial Statements and Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet 95Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 97
Schedules of Revenues, Expenditures and Changes
in Fund Balance -Budget to Actual:

Street Special Revenue Fund 99
Traffic Control and Safety Special Revenue Fund 100
Community Development Block Grant Special Revenue Fund 101 Development Impact Fees Fund 102Mclean / Hall / Putnam Trust Fund 103 Internal Service Funds:

Combining Statement of Net Position 105Combining Statement of Revenues, Expenses, and Changes in Net Position 106
Combining Statement of Cash Flows 107
Statistical Section (Unaudited):

Government-wide Information:

Net Position by Component Unit 108
Changes in Net Position 109
Fund and Other Information:

Fund Balances of Governmental Funds 111
Changes in Fund Balances — Governmental Funds 112Governmental Activities Tax Revenues by Source 113Governmental Fund Expenditures by Function 114 Top 25 Sales Tax Producers 115Ten Largest Property Tax Payers 117Taxable Sales by Category 116 Assessed Valuation of Taxable Property 118
Demographic and Economic Statistics 119
Visitors to Catalina Island by Transportation Type 120
Full-Time Equivalent Employees by Department 121
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INTRODUCTORY SECTION
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CITY OF AVALON
March 3, 2023,Honorable Mayor, Members of the City Council, and Citizens of the City of Avalon:

We are pleased to submit the Annual Comprehensive Financial Report of the City of Avalon (City) for the fiscal year (FY) ended June 30, 2022. This report has been prepared in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent public accounting firm of licensed certified public accountants.

This report consists of management’s representations concerning the finances of the City.

Responsibility for both accuracy of the data, and completeness and fairness of presentation, including all disclosures, rests with management. To provide a reasonable basis for making these representations, management has established an internal control framework that isdesigned both to protect the government’s assets from loss, theft, or misuse, and to compilesufficient reliable information for the preparation of financial statements in conformity withGAAP. Because the cost of internal controls should not outweigh their benefits, the City’sframework of internal controls has been designed to provide reasonable assurance rather thanabsolute assurance that the financial statements will be free from material misstatement.

Management asserts that, to the best of its knowledge and belief, the enclosed data is accurate in all material respects, and reported in a manner designed to present fairly thefinancial position and results of operations of various funds of the City, All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities havebeen included.

The City’s financial statements for the fiscal year ended June 30, 2022, have been audited by Davis Farr LLP, an independent public accounting firm of licensed certified public accountants.

The goal of the audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2022, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used andsignificant estimates made by management; and, evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was areasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2022, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component in the financial section of this report.The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report notonly on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal reports. These reportsare available in the City’s separately issued Single Audit Report.

To assist with the reader’s review of the City’s financial statements, management has provided a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A) section. This letterof transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the independent auditor’s report.

Profile of the Government
The City of Avalon is a tourism-driven harbor community located on Santa Catalina Island in the Channel Islands, approximately twenty-two miles off the coast of Southern California. TheCity’s jurisdictional boundaries cover a 2.8 square mile area on the southeast end of the islandaround Avalon Bay. The City serves a population of approximately 3,800 residents andwelcomes over one million visitors each year through its picturesque harbor.

The City, incorporated in 1913, is a general law city that operates under the Council-Manager form of government. Policy-making and legislative authority are vested in the City Council,consisting of the mayor and four council members, all of whom are elected at large. The Mayor is elected for a two-year term and council members are elected to serve four-year terms, with two members elected every two years. The City Council appoints the City Manager, who is responsible for implementing policies and ordinances approved by the City Council and overseeing the day-to-day operations of the City. The City Council also appoints the CityAttorney and City Clerk.

The City is a “full-service city” providing a wide range of services, including public safety, contracted through the Los Angeles County Sheriff’s Department, fire protection, planningand zoning, building inspections, recreation and other community services, and the maintenance and improvements of streets and other infrastructure. A “full-service city” is definedas a city that is financially responsible for the full set of basic tax-dependent municipalservices within its jurisdiction. The City is also responsible for various enterprise funds providing sewer, saltwater, and solid waste services, as well as harbor operations, to its users.Budgetary Process and Controls The City maintains budgetary controls, the objective of which is to ensure compliance with legal provisions embodied in the annual budget approved by the City Council. Annual budgetsare legally adopted for all governmental funds on a basis consistent with GAAP. Budgetarycontrol for management purposes is maintained as authorized by City Council.

The City Manager submits the budget to the City Council, who adopts the budget prior to the beginning of the fiscal year. Public hearings are conducted prior to the budget adoption. The City Manager is authorized to transfer appropriations between activities within a fund budget to facilitate the functions of those activities in accordance with the directions, goals, and policies of the City Council. City Council approval is required for any amendments during the fiscal year that result in additional appropriations or transfers between funds. Budgetary comparisons are reflected in the City’s financial report for all governmental funds.

Current Economic Conditions and Outlook
The information presented in the financial statements can be better understood when it is considered from the broader perspective of the specific environment in which the Cityoperates. The City’s economy is centered on travel and tourism and City operations are largelyfunded by visitor-driven tax revenues and fees. Transient occupancy tax (TOT) and sales tax revenues generate the City’s largest two sources of revenue in the General Fund and account for 66.2% of total General Fund revenues.

The City of Avalon was significantly impacted by the COVID-19 pandemic and the measures taken to reduce the transmission of the virus. Capacity restrictions to encourage socialdistancing, the closure of bars and indoor dining establishments, and the suspension of cruisetravel directly impacted City revenues. With the lifting of these restrictions, the City has benefitted from a strong rebound in demand for these activities and visitor-driven revenueshave generally exceeded pre-pandemic levels for the fiscal year ended June 30, 2022. While the City’s financial condition has improved significantly over the last two fiscal years, FY 2022 marks the third fiscal year with revenues directly impacted by the pandemic as a result of cruise travel not returning to the City until the late September 2021. A comparison of visitorsarriving to Catalina Island by transportation mode for the last ten fiscal years can be found in the Statistical Section beginning on page 108 of this report.TOT, a l2% tax assessed on short-term lodging, is the City’s largest source of revenue and accounted for 53.l% of General Fund revenues in FY 2021-2022. TOT increased by $2.68 million or 44.5% from the prior fiscal year, driven by increased occupancy during the peak summer visitor season and by increased average room rates, with the inventory of roomsavailable comparable to prior years. Both hotels and short-term vacation rentals saw similar increases in gross receipts reported to the City. Nationwide, prices for other lodging away from home including hotels and motels increased by 11.5% from June 2021 to June 2022.

Other lodging away from home is a component of the shelter index in the Consumer PriceIndex (CPI), which includes short-term accommodations at hotels, motels, resorts, hostels, vacation rentals and other similar establishments. The City allocates 22% of the TOT collectedto the Love Catalina Island Tourism Authority, to be used for promotion and music as approved by the voters in April 2004.

The City retains the following portions of the current lO% tax assessed on taxable sales activity: a half percent (O.5%) transaction and use tax to subsidize hospital operations (Measure C) and the normal Bradley-Burns sales tax (l%). The Measure C tax, approved by the voters in April 2000, is reflected in the sales tax revenue total reported in the financials; however, the collected revenue is entirely transferred to the Catalina Island Medical Center to support its operations. The Bradley-Burns sales tax is available to the City to fund general government services. Taxable sales activity increased in FY 2022 by 39.6% from the prior fiscal year. Restaurants and Hotels, which account for 54.0°/o of taxable sales activity in the City, increased by 52.2°/s, with the City benefitting from increased demand for travel and the return of special events to the City. While the growth in taxable sales from the prior fiscal year can be partially attributed to the lifting of pandemic-related restrictions, sales tax revenues exceeded pre-pandemic activity. Higher inflation, increasing the prices on taxable goods, did not reduced demand for travel and tourism over the fiscal year and contributed to the significant growth in sales tax revenues over the past fiscal year.Throughout the pandemic, the U.S. government passed several stimulus and relief packages,two of which provided direct fiscal funding to the City. The Coronavirus Aid, Relief, and Economic Security Act (CARES ACT) signed into law on March 27, 2020 appropriated $2.3 trillion for many different efforts including $150 billion in grants to state and local governments. The City received $50,000 of state pass-through funding in FY 2020-21. The American Rescue Plan Act (ARPA), which President Biden signed into law on March 11, 2021, appropriated $1.9 trillion of stimulus and relief proposal with $350 billion of total fundinggoing to state and local governments. The City was allocated approximately $880 thousand from the State and Local Fiscal Recovery Fund (SLFRF) recognized as revenue in F’i 2021-22.

The City utilized the SLFRF funds to partially offset revenues lost during the pandemic.The City’s proximity to large urban population centers and the abundance of open spaces on the island has resulted in a resurgence in tourism since the pandemic. While the City has experienced modest growth in visitation in cross channel arrivals, contributing to increasing revenues, strong demand for tourism has resulted in higher prices on goods and services without negatively impacting taxable sales activity. This fiscal year, we have continued toexperience strong demand; however, it is expected that demand will level off over the next twelve to eighteen months in response to federal monetary policies designed to control inflation. Until then, the City’s economy will continue to benefit from increased taxable activity.

Major Capital Project Initiatives
The Cabrillo Mole Ferry Terminal was the largest capital project of FY2021-22, with $314thousand added to construction in progress during the fiscal year. The Cabrillo Mole FerryTerminal is a multimodal transportation hub used by cross-channel carrier passengerstraveling between the City and the mainland and serves as the primary entry point to the City. During the prior fiscal year, the City completed the first phase of its rehabilitation, reinforcing the existing concrete members, replacing the steel grates, and repairing the concrete deck and railing, for a total project cost of $5.10 million. As currently proposed, thesecond phase of the project will replace and reconfigure the existing structures to improve passenger queuing and adjacent transportation circulation. The City is currently developing a design-build request for proposal and anticipates awarding the contract and beginning construction during the second half of the current fiscal year ending June 30, 2023. iv
Other capital improvements included engineering for the Pebbly Beach Road Revetment and the Five Corners Pedestrian Improvement projects, environmental remediation activity for the 206 East Whittley Housing Project, and various rehabilitations of harbor floats and structures.

AcknowledgementsThe preparation of this report would not have been possible without the year-round efforts of City Staff, with a special thanks to the Finance Department team. We would also like toexpress our appreciation to the Mayor and City Council for their leadership and support. Lastly,we would like to thank the City’s auditing firm, Davis Farr LLP, for their expertise and professional assistance.Respectfully submitted,
David Maistros Matthew Baker
City Manager Finance Director
v
City of Ava Ion
Organizational Chart
Fiscal Year Ended June 30, 2022
Citizens of
Avalon
City Council
City Attorney [ City Treasurer
City Manager
Administration Finance Fire Harbor Planning Public Works vi
City of Avalon
List of Elected and Appointed Officials
Fiscal Year Ended June 30, 2022
Elected Officials
Mayor Ann MarshallMayor Pro-Tern Michael i’once
Council Member Yesenia De La Rosa
Council Member Lisa LavelleCouncil Member Mary Schickling ADDointed Officials
City Manager David MaistrosCity Attorney Scott CampbellCity Treasurer Oley Olsen vii

FINANCIAL SECTION
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EaiisFarr 18201 Von Karmun Avenue I Suite 1100 Urvirie, CA 92612 CERTIFIED PUBLIC ACCOUNTANTS Main: 949,4742020 I Fax: 949.263.5520 INDEPENDENT AUDITOR’S REPORT
City CouncilCity of Avalon
Avalon, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Avalon (the “City”), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.In our opinion, the accompanying financial statements present fairly, in all materialrespects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Avalon as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits containedin Government Auditing Standards, issued by the Comptroller General of the United States.

Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We arerequired to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
During the year ended June 30, 2022, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 87, Leases. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial StatementsThe City’s management is responsible for the preparation and fair presentation of thefinancial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that arefree from material misstatement, whether due to fraud or error. 1 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt aboutthe City’s ability to continue as a going concern for one year after the date that the financialstatements are issued.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an auditconducted in accordance with GAAS will always detect a material misstatement when itexists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements areconsidered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financialstatements.

In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the City’s internal control.Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate theoverall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as agoing concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, amongother matters, the planned scope and timing of the audit, significant audit findings, andcertain internal control—related matters that we identified during the audit.

Required Supplementary InformationAccounting principles generally accepted in the United States of America require that theManagement’s Discuss/on and Analysis, Schedule of Revenues, Expenditures and Changesin Fund Balance — Budget and Actual General Fund, Local Transportation Special RevenueFund, Avalon Housing Authority Special Revenue Fund, Schedule of Changes in Net Pension Liability and Related Ratios During the Measurement Period, Schedule of Pension Plan Contributions, Schedule of Changes in Total OPEB Liability and Related Ratios during the Measurement Period, and Schedule of OPEB Plan Contributions be presented to supplement the basic financial statements. Such information is theresponsibility of management and, although not a part of the basic financial statements,is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an 2 appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiriesof management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basicfinancial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Report on Summarized Comparative InformationWe have previously audited the City of Avalon’s 2021 financial statements, and weexpressed an unmodified audit opinion on those audited financial statements in our reportdated January 12, 2022. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2021 is consistent, in all materialrespects, with the audited financial statements from which it has been derived.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining andindividual nonmajor fund financial statements and Budget to Actual Schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and Budget to Actual Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financialstatements. Such information has been subjected to the auditing procedures applied in theaudit of the basic financial statements and certain additional procedures, includingcomparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States of America. In our opinion, the combining andindividual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the Annual ComprehensiveFinancial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor’s report thereon. Our opinions on the financial statements do not cover the other information, and we do notexpress an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financialstatements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report datedMarch 3, 2023 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts,and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’sinternal control over financial reporting and compliance. c
Irvine, California
March 3, 2023
4 Management’s Discussion and Analysis
Management of the City of Avalon (City) offers this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2022 (Fiscal Year (FY) 2021- 22). We encourage readers to consider the information presented here in conjunction with the accompanying transmittal letter beginning on page i and the City’s financial statementsfound on pages 21-39 of this report.

Financial Highlights
• The City’s net position from governmental activities increased by $4.22 million or

23.4% to $22.26 million. This increase was primarily attributable to increased current assets, including cash and receivables, as a result of increased tax revenues. • Net position for business-type activities increased by $2.25 million or 23.7% to $11.74 million. This increase was a result of increased revenues from charges for services and decreased program expenses.
• At the end of the fiscal year, the City’s unassigned fund balance in the General Fund was $12.26 million. This increase of $5.47 million or 80.6% was primarily driven bystrong transient occupancy tax (TOT) revenues, up $2.68 million or 44.S% from theprior fiscal year, as well as $880 thousand in revenues from State and Local Fiscal Recovery Fund (SLFRF) in the American Rescue Plan Act (ARPA) used to replace revenues lost due to the pandemic.
• For the City’s proprietary funds, operating revenues exceeded operating expenditures in the Harbor, Sewer, and Saltwater funds by $2.36 million, $70 thousand, and $191respectively. • Capital Assets decreased by $1.02 million for governmental activities and decreased by $187 thousand for business-type activities. The decreases were attributable todepreciation exceeding new investments in capital assets, with several major projectsdeferred or delayed due to the pandemic. • The City’s debt and noncurrent liabilities decreased by $2.58 million or l8.9% for governmental activities and $1.96 million or l4.8% for business-type activities. Thedecrease was primarily attributable to decreases in net pension liabilities as a result ofpositive net investment income.

Using this Annual Report
This discussion and analysis is intended to serve as an introduction to the City’s financial statements. The City’s Basic Financial Statements are comprised of the following three components:
5 (1) Government-Wide Financial Statements, which include the Statement of Net Position and the Statement of Activities. These statements provide information about theactivities of the City as a whole and present a long-term view of the City’s finances. (2) Fund Financial Statements, which describe how City services are financed in the shortterm, as well as what resources are available for future spending. Fund financial statements also report the City’s operations in more detail than the government-widestatements by providing information about the City’s most significant funds. (3) Notes to the Financial Statements
In addition to the Basic Financial Statements, Required Supplementary Information and Combining and Individual Fund Schedules are presented immediately following the Notes to the Basic Financial Statements.

Reporting the City as a Whole
Government-Wide Financial Statements
The Government-Wide Financial Statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private-sector business.

The Statement of Net Position presents information on the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City isimproving or deteriorating.

The Statement of Activities presents information on how the government’s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, some revenues and expenses reported in this statement will result in cash flowtransactions in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).

Readers of financial statements often ask whether the City is better or worse off from a fiscal standpoint as a result of the current year’s activity. The Statement of Net Position andStatement of Activities provide information in a manner that answers this question. In addition to the financial information reported in these statements, economic factors (non-financial indicators) should also be considered in interpreting the fiscal health of the government (e.g. changes in the economy affecting consumer spending result in changes in the net positionand activities of the City).

Both of the Government-Wide Financial Statements distinguish functions of the City that areprincipally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Cityinclude general government and administration, public safety, planning, public works, and 6 community services. The business-type activities of the City include sewer, saltwater, solid waste, transit, and harbor operations.

The Government-Wide Financial Statements start on page 21 of this report.

Reporting the City’s Most Significant FundsFund Financial Statements The fund financial statements provide detailed information about the most significant funds and other funds — not the City as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensureand demonstrate compliance with finance-related legal requirements. All of the funds of theCity can be divided into three categories; governmental funds, proprietary funds, and fiduciary funds, which use different accounting approaches as summarized below:
• Governmental Funds — Most of the City’s basic services are reported in governmental funds. Governmental funds focus on near-term inflows and outflows of resources, withthe balances remaining as spendable resources at the end of the fiscal year. Thesefunds are reported using an accounting method called modified accrual accounting,which measures cash and all other financial assets that can be readily converted tocash. The Governmental Fund Financial Statements provide a detailed short-term viewof the City’s general government operations and the basic services it provides.Governmental fund information helps determine whether there are more or fewerfinancial resources that can be spent in the near future to finance the City’s programs.

The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds isdemonstrated through the Reconciliation of the Fund Financial Statements to theGovernment-Wide Financial Statements. Because the focus of the Fund FinancialStatements is narrower than that of the Government-Wide Financial Statements, thecomparison may provide a better understanding of the long-term impact of thegovernment’s short-term financing decisions. The Governmental Fund FinancialStatements start on page 25 of this report. • Proprietary Funds — Proprietary funds are used to account for essentially the same functions reported as business-type activities in the Government-Wide Financial Statements and are reported in the same way. The two types of proprietary funds areenterprise funds and internal service funds. The City uses enterprise funds to account for its harbor, sewer, saltwater, solid waste and transportation services and uses internal service funds to account for general administration, insurance, and vehiclemaintenance. The Proprietary Fund Financial Statements start on page 32 of thisreport. • Fiduciary Funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government wide financial statements because the resources of those funds are not available to 7 support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. After the date of the dissolution of the AvalonCommunity Improvement Agency (ACIA) on February 1, 2012, the non-housing assetsand liabilities of the former redevelopment agency were transferred to the Successor Agency of the ACIA (Successor Agency) and are reported as a fiduciary fund (privatepurpose trust fund).

Reporting Information Essential to Understanding the Basic Financial StatementsNotes to the Financial StatementsNotes to the Financial Statements are presented following the Fund Financial Statements toprovide additional information that is essential to a full understanding of the financial statements, including significant accounting policies, cash and investments, interfund transactions, liabilities, and other disclosures. The Notes to the Financial Statements start on page 40 of this report.Required Supplementary Information Immediately following the Notes to the Financial Statements is information that is required to accompany the Basic Financial Statements in order to add context to the data presented. In particular, budgetary comparison schedules are provided for all major governmental funds to offer a perspective as to how well the budgetary process and budget amendments relate tothe actual activity at the close of the reporting period. Additional pension related disclosuresare also included as Required Supplementary Information (RSI) showing historical data related to net pension liability, funding levels, and plan contributions.

Combining and Individual Fund Schedules
The Combining and Individual Fund Schedules are presented following the Notes to the Required Supplementary Information. These schedules supplement the information presentedin the Fund Financial Statements by showing the components which are reported in the aggregate (nonmajor funds) as Other Governmental Funds in the Basic Financial Statementsand by disclosing funds for which the City has a responsibility to account for the flow of assetsseparate from other assets of the City (e.g. special revenue funds restricted for a specific purpose).

Analysis of Government-Wide Financial StatementsThe Statement of Net Position reports the net position for governmental and business-type activities, as well as the combined total net position, which is determined by calculating thedifference between total assets and deferred outflows of resources and total liabilities anddeferred inflows of resources. Net position can serve as an important indicator of whether theCity’s overall financial condition is improving or deteriorating over time.

The City’s combined net position was $34.00 million for the fiscal year ended June 30, 2022, increasing by $6.47 million or 23.S0/o over the prior fiscal year. Cash and investments account 8 for the majority of the increase in net position. The increase is also attributable to lease receivables which are required to be reported starting with the fiscal year ended June 30, 2022 by Governmental Accounting Standards Board Statement 87 (“GASB 87”). Lease receivables are now required to be reported based on the present-value estimate of certain lease payments for leases where the City is the lessor and the City reported lease receivablesof $2.50 million for the fiscal year ended June 30, 2022, included as part of current andrestricted assets. The table below summarizes the net position of the governmental andbusiness-type activities over the prior two fiscal years.

Table 1
Statement of Net Position
(in Thousands)
Governmental Activities Business -1pe Activities Total
2022 2021 2022 2021 2022 2021
current and restricted assets $ 22,467 $ 15,629 $ 9,738 $ 5,061 $ 32,205 $ 20,690capital assets 15,609 16,635 17,948 18,135 33,557 34,770 Total Assets $ 38,0)6 $ 32,264 $ 27,686 $ 23,196 $ 65,762 $ 55,460 Deferred Outflows ofResources $ 2,036 $ 1,863 $ 1,177 $ 1,215 $ 3,213 $ 3,078 Current uabilities 1,856 1,380 929 912 2,785 2,292
Proportionate share of collective
net pension liability 3,910 6,618 2,484 4,573 6,394 11,191 Proportionate share of collective
net OPEB liability 6,411 6113 3,396 3,749 9,807 9,862Non-current uabilities 752 921 5,456 4,975 6,208 5,896 Total Liablities $ 12,929 $ 15,032 $ 12,265 $ 14,209 $ 25,194 $ 29,241 Deferred Inflows of Resources $ 4,923 $ 1,058 $ 4,859 $ 708 $ 9,782 $ 1,766 Net Position:Net investment in capital assets $ 15,015 $ 16,041 $ 17,948 $ 18,081 $ 32,963 $ 34,122Restricted Low and moderate incomeHousing 5,718 5,774 - - 5718 5,774 Capital projects 91 78 - - 91 78
Transportation 159 73 - - 159 73
Hospital 327 - - - 327 -
unrestricted 950 (3,928) (6,208) (8,587) (5,258} (12,515) Total ft Position $ 22,260 $ 18,038 $ 11,740 $ 9,494 $ 34,000 $ 27,532 The largest portion of the City’s net position, totaling $32.96 million, reflects the net investment in capital assets (land, buildings, infrastructure, and equipment) less anyaccumulated depreciation, accumulated amortization, and related outstanding debt used toacquire those assets. Net investments in capital assets decreased by $1.16 million or 3.4°kas annual depreciation exceeded new investments. The City’s capital assets do not representa financial resource, as they are used to provide services to Citizens, and consequently are not available for future spending. The City’s restricted net position remained relativelyunchanged from the prior fiscal year. As of June 30, 2022, unrestricted net position was 9 negative $5.26, an increase of $7.26 million from the prior fiscal year, primarily due to unrestricted revenues, such as TOT and sales taxes that were not spent or restricted by the end of the fiscal year. A comparison of net position by component unit for the last ten fiscalyears can be found in the Statistical Section beginning on page 108 of this report.

The Statement of Activities is intended to illustrate how the cost of governmental and business-type activities are financed either through program revenues or general revenues with the difference between total revenues and expenses resulting in either an increase ordecrease in the net position.

Table 2
Statement of Activities
(in Thousands)
Governmental Activities Business -Type Activities
2022 2021 2022 2021 2022 2021
Program Revenue
charges for ServtesOperating Grants &contributionscapital Grants & contributions General Revenue
Taxes:

Property taxes
sales taxes
Transient Occupancy taxes
Other taxes
Licenses and PernitsInvestrr€nt earningsMiscellaneous income Transfers
Total Revenues
Expenses
Public SafetyFire and AntulancePlanning, Buiing &Engineeringcommunity ServtesPublic works Transportation
General GovernmentHarborSewerSaltwaterSolid waste
Avaton Transit
Total Expenses
Change in Net Position
Net Positbn at Beginning of
Year
Net Position at End of Year
1,056 1260 -
2,137 1,491 -8,703 6,021
1,502 1,179 236
S 9 -
(22) 36 (246)
141 124 103
(113) (261) 113
$ 18,505 $ 13,093 $ 15,158
909997
1,8451,846
3,448
$ 2,126 $

2.891
- 1,056 1,260- 2,137 1,491- 8,703 6,021
192 1,138 1,371
- 5 9
131 (268) 167
14 244 138
261 - -
$ 13,612 $ 33,663 $ 26,705
$ - $ 2,343
- 2,895
909997
1,8451,846
Total
24 S 1,287 $ 1,068 $ 14,943 $ 12,983 $ 16,230 $ 14,051
3,785 2,166 9 31 3,794 2,197
24 $ 2,343
2,895
$ 2,126
2,891
706 - - 706
959 - - 959
1,710 - - 1,7101,253 - - 1,253
2,810 - - 3,448 2,810 - 6,478 7,079 6,478 7,079
- 2,936 2,652 2,936 2,652
- 691 692 691 692- 2,572 2,344 2,572 2,344
-
- 235 162 235 162
$ 14,283 $ 12,455 $ 12,912 $ 12,929 $ 27,195 $ 25,384$ 4,222 $ 638 $ 2,246 $ 683 $ 6,468 $ 1,321 18,038 17,400 9,494 8,811 27,532 26,211.0
$ 22,260 $ 18,038 $ 11,740 $ 9,494 $ 34,000 $ 21,532
10 The increase in net position of $4.22 million for governmental activities is largely attributable to increased general tax revenues. TOT increased by $2.68 million or 44.5% from the priorfiscal year. The increase was partially attributable to increased occupancy rates during the peak summer season, and the return of events cancelled during the prior fiscal year inresponse to the pandemic returning to the City. However, strong demand also resulted inincreased average room rates. In addition, sales tax revenues increased by $646 thousand or

43.3°/o from the prior fiscal year. The increase is partially attributable to pandemic-related restrictions impacting taxable sales activity in the prior fiscal year, including the closure ofbars and indoor dining; however, sales tax revenues also exceeded pre-pandemic levels. Acomparison of governmental activities tax revenues by source for the last ten fiscal years canbe found in the Statistical Section beginning on page 108 of this report.

Expenses for governmental activities increased by $1.83 million or l4.7°/o from the prior fiscal year with Transportation and General Government expenses accounting for the majority of the increase. The City utilizes funding provided by the Los Angeles MetropolitanTransportation Authority (Metro) to subsidize cross-channel ferry travel costs for residents and the City utilized increased revenues received from Metro during FY 2021-2022 to expand its subsidy program. General Government expenses increased primarily due to revenuesharing arrangements passed by the voters as the result of increased revenues previously discussed. The City funds tourism and promotion activities by allocating 22% of its TOT revenues to the Love Catalina Island Tourism Authority (Love Catalina) and the increase in TOT revenues was partially offset by increased tourism and promotion expenses to Love Catalina. In addition, the City collects a O.5% add-on sales tax, included in Sales Tax revenues, which it passes through to the local hospital, the Catalina Island Medical Center, to subsidize its operations.Governmental activities are primarily supported by taxes but may be partially offset through the collection of fees for services. For example, Planning, Building, & Engineering expensestotaling $909 thousand were offset through the collection of building permits and other planning-related fees and grant revenues, totaling $676 thousand, for a net cost of $233 thousand supported through general tax revenues.

Business-type activities experienced an increase in net position of $2.25 million or 23.7% from the prior fiscal year. The increase in the prior fiscal year was primarily attributable to increased program revenues, with charges for services increasing by $1.96 million or 15.1%.Business-type activities should be self-supporting with the cost of providing the servicerecovered by the users of the service provided. The City completed a cost of service study during the prior fiscal year for its Sewer, Saltwater, and Solid Waste operations and increased rates during FY 2021-2022 to fully recover operating costs and fund future capital investment.Harbor, Sewer, and Saltwater charges for service exceeded costs by $2.18 million, $45 thousand, and $183 thousand, respectively. The deficits in the net cost of service for Solid Waste and Avalon Transit were anticipated. The cost of service study phased the required rate increases for Solid Waste over several years to minimize the impact on rate payers. The City has historically subsidized operating costs for transit services with tax revenues in orderto provide these services to residents and visitors at an affordable rate. 11 The table below summarizes the net cost of governmental and business-type activities.

Table 3
Net Cost of Activities
(in Thousands)
Government Activities:

Public SafetyFire and AmbulancePlanning, Building &Engineering Community Services
Public Works
Transportation
General Governrrnt
Total Government Activities
Business-Type Activities:

Harbor
SewerSaltwaterSolid Waste
Avalon Transit
Total Business-TypeActivities
Total Primary Government
the net cost of services, totaling
that was placed on the City’s
Analysis of Fund Financial Statements
uses fund accounting to ensure and demonstrate compliance with finance-related uirements. The focus of the City’s governmental funds is to provide near-term outflows, and balances of spendable resources. Such information is useful in the City’s financing requirements.

The Balance Sheet for governmental funds is similar to that of a private enterprise in that assets less liabilities equals the funds available for use. In the private sector, this balance isreferred to as retained earnings; whereas, governmental fund financial statements maintaina Fund Balance. Over time, the Fund Balance may serve as a useful measure of a City’savailable resources. The Fund Balance designations pursuant to Government Accounting Total Cost of Services Net Cost of Services
2022 2021 2022 2021
S 2,343 $ 2,126 $ 2,066 $ 1,875
2,895 2,891 2,413 2,525
909 706 233 120997 959 899 677
1,845 1,710 1,632 1,4851,846 1,253 (339) 179
3,448 2,810 2,283 2,359
S 14,283 $ 12,455 $ 9,187 $ 9,220
$ 6,478 $ 7,079 $ (2,184) $ (253)
2,936 2,652 (45) (157)
691 692 (183) (142)
2,572 2,344 217 349
235 162 156 119
S 12,912 $ 12,929 $ (2,039) $ (84)5 27,195 $ 25,384 $ 7,148 $ 9,136 After considering program revenues supporting the activities, $7.15 million, represents the financial burden or subsidy taxpayers during the year.

The City
legal reqinflows,assessing
12 Standards Board Statement No. 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, are classified as Non-spendable, Restricted, Committed, Assigned, or Unassigned. Non-spendable Fund Balances cannot be spent because they are either not in a spendable form (e.g. reserve for inventories) or are legally or contractually required to remain intact. Restricted Fund Balances are limited in use by externally imposed constraints (e.g. debt covenants) or the law (e.g. constitutional provisions or enabling legislation). Committed,Assigned, and Unassigned Fund Balances are unrestricted; however, their use may be limited by action of the governing body (e.g. replacement reserves) or administrative purposes (e.g.reserve for encumbrances). The Unassigned Fund Balance represents the resources available for general purpose uses.

Table 4
Fund Balances by Category
Fiscal Year Ended June 30, 2022
Nonspendable:

Prepaid Expenses
Restricted For:

Low and Moderate Income HousingCapital ProjectsStreet ProjectsHospital Unassigned:

Total Fund Balances
General Fund All Other Funds Total Funds
S 2,750 $ - $ 2,750
5,718,076 5,718,076
90,663 90,663
159,252 159,252
326,807 - 326,807
12,259,253 (5,421) 12,253,832
$ 12,588,810 $ 5,962,570 $ 18,551,380
The table above provides a summary of fund balances for the major funds presented in the City’s government-wide financial statements. As of the year ended June 30, 2022, the General Fund had an unassigned fund balance of $12.26 million. The General Fund is the primary operating fund of the City. All other governmental funds include restricted fund balances of $5.72 million for low and moderate income housing, $91 thousand for capital projects,including $49 thousand from the collection of development impact fees, and $159 thousand for street-related projects.The General Fund’s unassigned fund balance increased by $5.47 million or 8O.6% as of June 30, 2022 compared to the prior fiscal year. The General Fund’s unassigned fund balance exceeds its total expenditures and transfers out for the fiscal year ended June 30, 2022. Acomparison of the General Fund’s fund balance for the last ten fiscal years can be found inthe Statistical Section beginning on page 108 of this report. While the City has an adopted policy requirement for unassigned fund balance to be at least SO% of annual expenditures, the sufficiency of reserves and working capital in other funds, should be considered whenassessing the sufficiency of the balance as of June 30, 2022.

The table below further details the net change in fund balance for the City’s General Fund. 13 Table 5
General Fund Financial Summary
Revenues:

Taxes
Licenses, Permits and FeesFines, Forfeitures andPenalties Investment IncomeIntergovernmental RevenueCharges for ServicesOther Revenue Total Revenues
Expenditures:

Public SafetyFire and AmbulancePlanning, Building &Engineering Community Services
Public Works
Trans po it ation
General GovernmentCapital Expenditures
Debt Service
Total Expenditures
Excess(Deficiency) ofRevenues Over(Under)Expenditures
Other Financing Sources(Uses
Transfers InTransfers Out
Total Other Financing
Sources(Uses)
Net change in FundBalance
2022 2021 $ Change °/oChange
$ 13,648,211 $ 10,050,988 $ 3,597,223 35.8°/o
601,823 505,968 95,855 l8.9°/o
11,017 11,299 (282) -2.5°/o
(78,423) 400 (78,823) 19705.8°Io
1,514,236 225,729 1,288,507 570.8%
582,481 444,787 137,694 31.O°k
107,097 129,199 (22,102)
$16,386,442 $11,368,370 $ 5,018,072 44. 1°/o
$ 1,817,413 $ 1,642,918 $ 174,495 10.6%
2,687, 161 2,746,346 (59,185) -2.2°/o
849,889 627,562 222,327 35.4°/o723,883 625,769 98,114 15.7°/o 1,022,359 889,307 133,052 15.0°/o
3,063,951 2,242,949 821,002 36.6°/o
111,331 143,776 (32,445) -22.6°/o137,010 137,012 (2) 0.0% $10,412,997 $ 9,055,639 $ 1,357,358 15.OWo$ 5,973,445 $ 2,312,731 $ 3,660,714 158.3% 13,818 77,838 -
(185,766) ( 156,500) (29,266) 18.7%
$ (171,948) $ (78,662) $ (93,286) 118.6%$ 5,801,497 $ 2,234,069 $ 3,567,428 159.7% Revenues in the General Fund increased by $5.02 million or 44.l% from the prior fiscal year as a result of increased tax and intergovernmental revenues. In addition to the increased TOTand sales tax revenues, the City of Avalon received $880 thousand from the State and Local Fiscal Recovery Fund (SLFRF) as part of the American Rescue Plan Act (ARPA) to partially offset revenues lost during the pandemic. These funds are reflected in the total for Intergovernmental Revenue.
14 Expenses in the General Fund increased by $1.36 million or l5.O%. The increase in expense generally reflects the restoration of staffing and services that had been reduced in the prior year in response to the pandemic. Planning, Building, and Engineering increased by $222thousand or 35.4% as the result of increased contract services for the preparation of various planning documents, including the Housing Element, in addition to the general restoration of staffing and services. General Government increased by $821 thousand or 36.6% primarilyas a result of the revenue sharing arrangements previously discussed.

Unlike the governmental- type activities, reporting for the business-type activities of an enterprise fund focuses on the net position and changes in net position as opposed to a fund balance; therefore a reconciliation between the government-wide financial statements and the proprietary fund financial statements is not necessary. The table below provides assummary of net position by business-type activities.

Table 6
Business-Type Activities
Fiscal Year Ended June 30, 2022
Harbor Sewer Saltwater Solidwaste Avalon Transit Total
Operating Revenues:

Charges for SeMces $ 8,661,8W $ 2,981,666 $ 874,239 $ 2,346,729 $ 78,463 $ 14,942,907Other revenue 103,076 - - - - 103,076 Total Operating Revenues $8,764,886 $2,981,666 $ 874,239 $2,346,729 $ 78,463 $ 15,045,983 Operating Expenses:

Wages, Benefits, and
Contracts $ 4,267,227 $ 1,947,353 $ 619,471 $ 2,483,055 $ 204,618 $ 9,521,724 Supplies and Maintenance 1,574,857 530,957 15,770 11,905 24,525 2,158,014 Depreciahon 567,206 433,305 47,923 66,986 5,416 1,120,B36 Total Operating Expenses $6,409,290 $2,911,615 $ 683,164 $2,561,946 $ 234,559 $12,800,574Operating Income(Loss) $2,355,596 $ 70,051 $ 191,075 $ (215,217) $ (156,096) $ 2,245,409 Non-Operating Revenues(Expenses)
Taxes $ 236,156 $ - $ - $ - $ - $ 236,156Grants and Other Revenue - - - 8,695 - 8,695
liipaiment Loss - - - - - -Interest Inconr 31,234 5,708 26,282 (309,728) - (246,504)Interest Expense (202) (5,839) (2,176) - - (8,217) Total Non-Operating
Revenues(Expenses) $ 267,188 $ (131) $ 24,106 $ (301,033) $ - $ (9,870) Capital Contributions and Transfers
Transfers In $ - $ - $ - $ - $ 113,324 $ 113,324
Transfers Out - - - -
Total Capital Contributionsand Transfers $ - $ - $ - $ - $ 113,324 $ 113,324Change in Net Position $2,622,784 $ 69,920 $ 215,181 $ (516,250) $ (42,772) $ 2,348,863 Net Position at Beginning of
Year $4,602,292 $4,244,662 $1,080,717 $ (370,967) $ 27,671 $ 9,607,057Net effect of activity between the Internal Service funds andenterprise funds over tin: (103,575) Net Position at End ofYear $7,225,076 $4,314,582 $1,295,898 $ (887,217) $ (15,101) $11,852,345 15 As previously noted, the operating revenues in the Harbor, Sewer, and Saltwater funds exceeded operating expenses, resulting in increases to net position of $2.62 million, $70 thousand, and $215 thousand, respectively, after considering non-operating revenues andtransfers. In particular, the Harbor collects an admission tax, reflected in non-operating revenues, totaling $236 thousand for the fiscal year ended June 30, 2022. Operating and nonoperating revenues need to exceed operating expenses at a level sufficient to fund needed capital asset replacement and other capital improvements.In addition to its operating loss of $215 thousand, the Solid Waste Fund experienced a nonoperating loss of $301 thousand, primarily due to losses on its investments in its landfill closure and post-closure trust account. The City may need to make additional contributionsto the trust to finance closure and post closure costs depending on future interest earningsand actual costs.

The fiduciary funds basic financial statements consist of a Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position, summarizing the assets, liabilities,and net position of the City’s Private-Purpose Trust fund for the Successor Agency to the Avalon Community Improvement Agency (Successor Agency). The Private-Purpose Trustfund, which has a negative net position, was established to wind down the affairs of the City’s improvement agency as a result of the statewide elimination of redevelopment agencies. Once the enforceable obligations of the Successor Agency have been dissolved the City’s PrivatePurpose Trust fund will be eliminated.

The Successor Agency receives taxes from the State’s Redevelopment Property Tax Trust Fund (RPTTF) every six months to fund enforceable obligations due July 1 to December 31(Period A) and January 1 to June 30 (Period B). Debt service obligations will continue through September 1, 2034; therefore the Successor Agency has a negative net position that willcontinue to diminish as obligations are paid. The final debt service payment is scheduled to be made September 1, 2034 (fiscal year ending June 30, 2035).Major Fund Budgetary ComparisonsRequired Supplementary Information follows the notes to the basic financial statements. Thisincludes budgetary comparison schedules for the General Fund and major special revenue funds presented in those statements. These schedules report the original budget adopted andfinal budget for each of these funds as well as a comparison of the final budget to the actual amounts reported in the financial statements.

During the year, with the recommendation from City staff, the City Council revised the City’sbudget. Adjustments to the budget were made on an as needed basis to accommodate additional appropriations and all amendments that result in an increase or decrease in the total budget appropriations were approved by the City Council.The City’s General Fund actual revenues exceeded the final budgeted amount by $858thousand or S.S0/o. The City originally budgeted visitor-driven tax revenues and fees to be closer to pre-pandemic levels; however, actual tax revenues significantly exceeded budgetedamounts requiring the midyear amendments. Even after midyear amendments, tax revenuesexceeded budgeted amounts by $1.37 million. The increase in tax revenues compared to 16 budgeted amounts was partially offset by negative variance in intergovernmental revenues of $746 thousand. This was the result of reimbursable grant revenues not reaching budgeted amounts based on actual capital expenditures during the fiscal year.

The actual expenditures for the City’s General Fund at year-end were $2.15 million less thanfinal budgeted appropriations. The budget-to-actual variance in appropriations was principally due to unspent capital expenditures, with actual capital expenditures $1.47 million less than budgeted amounts. The City had planned to begin construction on two large infrastructureprojects in the General Fund during the fiscal year but deferred the projects to build reserves and pursue additional funding opportunities.

Capital AssetsAt the close of the fiscal year, the City of Avalon had $33.62 million in capital assets as shown in the table below, with $15.67 million of capital assets for governmental activities and $17.95 million of capital assets for business-type activities.

Land
Construction in progress
Total non-depreciable assets
Capital assets, net of depreciation:

Building and improvementsIrqwovernents other than buildingsMachinery and equipmentInfrastructure Total depreciable assets Total capital assets, net
During the fiscal year ended June 30, 2022, construction in progress for governmental activities increased by $113 thousand and included engineering for the Pebbly Beach Road Revetment and Five Corners Pedestrian Improvements projects. Additions to depreciable assets included fire station doors, internet phone system, and aquatic playground equipment.Construction in progress for business-type activities increased by $558 thousand, primarilyas a result of various Harbor Fund projects, including the second phase of the Cabrillo Mole Ferry Terminal improvements, construction of a new pump-out dock, rehabilitation of the Green Pier and End Float, and engineering for the replacement of the underground fuel tank.

Improvements other than buildings included the rehabilitations of Floats 2 and 3 totaling $275 thousand. For additional information regarding capital assets refer to Note 4 of the financialstatements.

Table 7
Capital Assets
(in Thousands)
Capital assets, non-depreciable:

Government Activities Business-Type Activities Total
2022 2021 2022 2021 2022 2021
S 2,853 $ 2,853 $ - $ - $ 2,853 $ 2,853
1,154 1,058 923 365 2,017 1,423
$ 4,007 $ 3,911 $ 923 $ 365 $ 4,930 $ 4,276
$ 5,021 $ 5,261 $ 2,250 $ 2,351 $ 7,271 $ 7,612
6,215 6,988 9,882 10,652 16,097 17,640
361 475 1,110 182 1,477 1,257 - - 3,783 3,985 3,783 3,985 $ 11,603 $ 12,724 $ 17,025 $ 17,770 $ 28,628 $ 30,494$ 15,610 $ 16,635 $ 17,948 $ 18,135 $ 33,558 $ 34,770 17 Debt Administration
At the close of the fiscal year ended June 30, 2022, the City had long-term obligations of $22.41 million. The table below shows these debt obligations broken out by governmental and business-type activities. During the fiscal year, the City’s debt obligations decreased by $4.54 million or 16.9% driven by decreases to net pension liabilities of $4.80 million or 42.9°/s.

Table 8
Debt and Noncurrent Liabilities at Year End
(in Thousands)
Governmental Activities Business-Type Activities Total
2022 2021 2022 2021 2022 2021
Description:
compensated Absences $ 430 $ 428 $ 264 $ 262 $ 694 $ 690 clam-s Payable 98 142 26 32 124 174capital Lease Liability 224 351 - - 224 351 state Departrrnt of Boating
&Waterways Loan - - - 54 - 54
Landfill closure obligation - - 5,165 4,627 5,165 4,627Net OPEB Liability 6,411 6,113 3,396 3,749 9,807 9,862Net Pension Liability 3,910 6,618 2,484 4,513 6,394 11,191Total Long-Term Liabilities $ 11,073 $ 13,652 $ 11,335 $ 13,297 $ 22,408 $ 26,949 The decrease in net pension liabilities are primarily due to positive net investment income.

See Note 6 in the notes to the financial statements for more information on the City’s pensionplan obligations.

Considerations, Plans and Projections for Next Fiscal YearWhile the COVID-19 pandemic and the measures taken by the County, State, and FederalGovernment to reduce the spread and transmission of the disease led to significant disruptions to the City’s tourism industry, the lifting of these restrictions has resulted in a resurgence oftourism to the City. Visitor-driven tax revenues and fees, representing the majority of City revenues, exceeded their pre-pandemic levels during the fiscal year ended June 30, 2022.

While the resurgence of tourism in the City has outpaced statewide averages, the increases in the City were driven by increased per-visitor spending, as the overall number of visitors, occupancy rates, and transient rental inventory were comparable to pre-pandemic levels.While strong revenue figures have continued into the new fiscal year, it is likely that Federal monetary policy measures taken to curb inflation will result in downward pressures on consumer demand and prices over the next twelve to eighteen months.

Management took a conservative approach to estimating revenues when preparing the City’sFiscal Year 2021-2022 Budget and adjusted appropriations accordingly, resulting in theincreased net position for the fiscal year ended June 30, 2022. Management continued this approach in developing the Fiscal Year 2022-2023 Budget and estimated TOT revenues to be below the actual revenues experienced in Fiscal Year 2021-2022. The City Council adopted aFiscal Year 2022-2023 budget that maintains a structurally balanced operations based, with 18 the higher than anticipated visitor-driven revenues to be utilized to finance significant capital outlays planned in the upcoming fiscal years.

The City has a number of major capital projects anticipated to begin construction during the upcoming fiscal year. The projects address the rehabilitation of several existing structures in the City and along the waterfront, some of which were deferred as a result of the pandemic, with an emphasis on pedestrian improvements and climate resiliency.

Contacting the City’s Financial Management
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to show the City’s fiduciary responsibility for the funds it receives. If you have questions about this report or need additional financial information, please contact the City’s Finance Department at:

City of Avalon
Attn: Finance Department
410 Avalon Canyon Road
P.O. Box 707
Avalon, CA 90704
19 BASIC FINANCIAL STATEMENTS
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GOVERNMENT-WIDE FINANCIAL STATEMENTS

THE STATEMENT OF NET POSITION AND THE STATEMENT ACTIVITIES One of the most important questions asked about the City’s finances is, “Is the City as a whole betteror worse off as a result of this year’s activities?” The Statement of Net Position and the Statementof Activities report information about the City as a whole and about its activities in a way that helpsanswer this question. These statements include all assets and liabilities using the accrual basis ofaccounting, which is similar to the accounting used by most private-sector companies. All of thecurrent year’s revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the City’s net position and changes within it. You can think of the City’s net position - the difference between assets/deferred outflows and liabilities/deferred inflows as one way to measure the City’s financial health or financial position. Over time, increases or decreases inthe City’s net position are one indicator of whether its financial health is improving or deteriorating.You will need to consider other non-financial factors such as changes in the City’s property tax baseand the condition of the City’s roads, to assess the overall health of the City.

The Statement of Net Position and the Statement of Activities, present information about the following:Governmental Activities — The City’s basic services are considered to be governmental activities, including (1) public safety, (2) fire and ambulance, (3) planning, building and engineering, (4) community services, (5) public works, and (6) general government. Property taxes, sales taxes andtransient occupancy taxes finance most of these activities.

Business-tvQe Activities — The City’s proprietary funds are considered to be business-type activities,including (1) harbor, (2) sewer, (3) saltwater, (4) solid waste, and (5) Avalon transit. 20 CITY OF AVALON
Statement of Net Position
June 30, 2022
(With comparative information for the prior year)
Pnmary Government
Totals
Governmental Business-type
Activities Act:vities 2022 2021
Assets:

Current assets:

Cash and investments (note 2) $ 11,697,3)8 3625413 21,322,791 14,236,769Restricted cash and investments (note 2) - 2,635,796 2,635,796 2683,396 Receivables net:

Accounts 69,915 1,371,341 1,441,262 111,111
Taxes 2,791,745 299,874 3,091,619 2,400,796
Grants 796,972 75,198 872,170 353,711Interest 23,092 4,649 27,741 6,335 Due from ACIA Successot Agency 6,043 - 6,043 6,043
Notes receivable 292,000 - 292,000 292,000Leases (note 13) 405,812 2,093,289 2.499,101 - Internal balances 380,628 (380,628) - -Inventories
-
- -
Prepaid items 2,750 14,085 16,835 -
Noncurrent assets (note 4):

Capital assets, not being depreciated 4,006,653 922,939 4,929,592 4,275,641Capital assets, net of accumulated depreciation 11,603,069 17,024,898 28,627,967 30,494,130 Total assets 38,076,057 27,686,860 65,762,91) 55,460,004 Deferred outflows of resources:

Deferred o,tflows - pension related (note 6) 928,411 589,665 1,518,076 1,513,970Deferred otfiows - OPEB related (note 7) 1,108,263 587,039 1,695,302 1,504,790 Total ceferred outflows of resources 2,036,674 1,176,704 3,213,318 3,018,760 Liabilities:

Current liabilit es:

Accounts payable 1,657,090 643,465 2,300,555 1,810,113
Interest payable 7,231 - 7,231 10,281
Accrued liabilities 192,092 39,696 23t,788 344,8)0
Unearned revenue - 221,220 221,220 126,526Other liabilities - 25,000 25,000 - Noncurrent liabilities:

Due within one year (noteS) 409,667 112,868 582,535 635,766Due in more than one year 342,411 117,552 459,963 632,902 Landfill closure obligation - 5,165,309 5,165,309 4,627,461Net pension liability (note 6) 3,910,221 2,483,524 6,393,745 11,190,792Net OPEB liability (note 7) 6,411,053 3,395,894 9,806,947 9,861,535 Total liabilibes 12,929,771 12,264,528 25,194,299 29,240,246 Deferred inflows of resources:

Deferred inflows - pension related (note 6) 3,743,200 2,377,443 6,120,643 1,292,391 Deferred inflows - OPEB related (note]) 773,061 409,485 1,182,546 474,102Deferred inflows ‘lease related (note 13) 406,846 2,072,509 2,479,355 - Total deferred inflows of resources 4,923,101 4,859,431 9,782,544 1,766,493 Net position:

Net investment in capital assets 15,015,392 17,947,837 32,963,229 34,121,700 Restricted for:

Low ano moderate ncome housing 5,718,076 - 5,718,076 5,773,570 Capital Projects 90,663 - 90,663 78,398
Transportation 159,252 - 159,252 73,270
Hospital 326,807 - 326,807 -
Unrestricted 949,663 (6,208,238) (5,258,515) (12,514,913) Total net posibon $ 22,259,853 11,739,599 33,999,452 27,532,025 See accompanying notes to the financial statements
21 CITY OF AVALON
Statement of Activities
Year ended June 30, 2022
(With comparative information for the prior year)
Program Revenue
Charges Operating Capital
for Grants and Grants and
Functions/programs Expenses Services Contributions Contributions Governmental activities:

Public sa(ety $ 2342,899 276,584 - -Fire and ambulance 2,895,151 482,507 - -Planning, building and engineering 908,925 373,598 302,313 - Community services 996,664 73,078 24,302
Public works 1,845,101 38,966 174,261 -
Transportation 1,845,595 - 2,184,653 -
General government 3,448,551 42,589 -
Total governmental activities 14,282,886 1,287,322 3,784,571 24,302 Business-type activities:

Harbor 6,478,196 8,661,810 - -Sewer 2,936,353 2,981,666 - -Saltwater 691,097 874,239 -Solidwaste 2,572,161 2,346,729 8,695 - Avalon transit 234,559 78,463 -
Total business-type activities 12,912,366 14,942,901 -
Total $ 27,195,252 16,230,229 3,793,266 24,302
General revenues:

Taxes:

Property taxes
Sales taxes
Transient occupancy taxes
Other taxes
Licenses and permits
Investment earnings (loss)
Miscellaneous income
Transfers
Total general revenues and transfers
Change in net position
Net position, beginning of yearNet position, end of year See accompanying notes to the financial statements
22 Net (Expense) Revenue and Chanqes in Net Position
Primary Government
Totals
Governmental Business-type
Activities Activities 2022 2021
(2,066,315) - (2,066,315) (1,875,047)(2,412,644) - (2,412,644) (2,525,687) (233,014) - (233,014) (120286)(899,284) - (899,284) (677367) (1,631,874) - (1,631874) (1,485,105)
339,058 - 339,058 (179,058)
(2,282,618) (2,282,618) (2,358,895)
(9,186,691) - (9,186,691) (9,221,445)
- 2,183,614 2,183,614 253,257- 45,313 45,313 157,174
- 183,142 183,142 142,435- (216,737) (216,737) (349,310) (156096) (156,096) (118,752)
- 2,039,236 2,039,236 84,804
(9,186,691) 2,039,236 (7,147,455) (9136,641)
1,055,691 - 1,055,691 1,259,528
2,137,299 - 2,137,299 1,490,722
8,703,537 - 8,703,537 6,021,549
1,501,912 236,156 1,738,068 1,370,528
5,289 - 5,289 9,039
(22,393) (246,504) (268,897) 167,540
140,819 103,076 243,895 138,178
(113,324) 113,324 - -
13,408,830 206,052 13,614,882 10,457,084
4,222,139 2,245,288 6,467,427 1,320,443
18,037,714 9,494,311 27,532,025 26,211,582
$ 22,259,853 11,739,599 33,999,452 27,532,025
See accompanying notes to the financial statements
23 (This page intentionally left blank)

GOVERNMENTAL FUND FINANCIAL STATEMENTS

GENERAL FUND
The General Fund has been classified as a major fund and is used to account for resources traditionally associated with governments which are not required legally or by sound financial management to be accounted for in another fund.

SPECIAL REVENUE FUNDS
The Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure (or a particular purpose. The following funds have been classified as major funds:

Local Transportation — This fund is used to record allocations made by the Los Angeles County Transportation Commission for the construction of streets, roads, bikeways, pedestrian facilities as well as the City’s transportation system as a whole.

Avalon Housing Authority — This fund is used to account for the activity associated with the City’s continuing housing operations. This fund was created effective February 1, 2012 as a result oflegislation enacted by the State of California.

NONMAJOR FUNDS
Nonmajor Funds is the aggregate of all the other governmental funds. 24 CITY OF AVALON
Balance Sheet
Governmental Funds
June 30, 2022
(With comparative information for the prior year)
Special Revenue FundsLocal
Transportation Avalon Housing
General Fund Fund Authority
Assets:

Cash and investments $ 10,600,986 95,085 5,495,932
Receivables, net:

Accounts 64,791 - -
Taxes 2,111,299 659,637 -
Grants 796,972 - -
Interest 11,951 - 9,027Notes receivable - - 292,000
Leases 116,348 - 289,464
Prepaid expenses 2,750 - -Due from ACIA Successor Agency - - 6,043 Due from other funds (note 3) 412,851 -
Advances to other funds (note 3) 186,989 - -
Total assets $ 14,304,937 754,722 6,092,466
Liabilities:

Accounts payable $ 1,114,638 368,371 55,119Accrued liabilities 136,466 - 792 Due to other funds (note 3) - 386,351 26,500
Total liabilities 1,251,104 754,722 82,411
Deferred inflows of resources:

Unavailable revenue 350,156 - -
Leases 114,867 - 291,919
Total deferred inflows of resources 465,023 291,979
Fund balances:

Non-spendable:

Prepaid expenses 2,750 - -
Restricted:

Low and moderate income housing - - 5,718,076
Capital projects - - -
Street projects - — -
Hospital 326,807 - -
Unassigned 12,259,253 -
Total fund balances 12,588,810 - 5,718,076Total liabilities, deferred inflows of resources and fund balances $ 14,304,937 754,722 6,092,466 See accompanying notes to the financial statements
25 Totals
Nanmajor
Governmental
Funds 2022 2021
233,100 16,425,103 10,359,865
5,124 69,915 94,552
20,809 2,791,745 2,265,237
- 796,972 353,777
283 21,261 5,406
- 292,000 292,000- 405,812 435,550- 2,750 -- 6,043 6,043- 412,851 857,907- 186,989 245,419 259,316 21,411,441 14,915,756
13,353 1,551,481 996,943
1,469 138,727 178,741
- 412,851 257,745
14,822 2,103,059 1,433,429
- 350,156 694,475- 406,846 435,550
757,002 1,130,025
- 2,750 -- 5,718,076 5,773,570
90,663 90,663 78,398
159,252 159,252 73,270
- 326,807 -
(5,421) 12,253,832 6,427,064
244,494 18551,380 12,352,302259,316 21,411,441 14,915,756 See accompanying notes to the financial statements
26 (This page intentionally left blank)

CITY OF AVALON
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2022
Fund balances of governmental funds $ 18,551,380
Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Capital assets 32,820,497
Accumulated depreciation (17,466,134)
Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. 350,156
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.

Compensated absences (429,448)Capital lease payable (224,335)Interest payable (7,237) Net pension and OPEB liabilities and related deferred outflows and inflows of resources are not due and payable in the current period and, therefore are not reported in the governmental funds (note 6).

Deferred outflows - pension 898,331Deferred inflows - pension (3,621,917)Net pension liability (3,783,526)Deferred outflows - OPEB 1,108,263Deferred inflows - OPEB (773,061) Other post employment benefits (6,411,053)
Internal service funds are used by management to charge the costs of employee benefits, liability insurance and vehicle maintenance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in theStatement of Net Position. 1,054,298 Internal service fund receivables/payables representing the cumulative crossover effect of involvement with business-type activities. 193,639 Net position of governmental activities $ 22,259,853
See accompanying notes to the financial statements
27 CITY OF AVALON
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
Year ended June 30, 2022
(With comparative information for the prior year)
Special Revenue Funds
Revenues:

Local
Transportation Avalon Housing
General Fund Fund Authority
Taxes
Licenses, permits, and feesFines, forfeitures, and penalties Investment incomeIntergovernmental revenue
Charges for services
Other revenue
Total revenues
Expenditures:

Current:

Public safetyFire and ambulance
Planning, building and engineering
Community services
Public works
Transportation
General government:

Services and chargesContract services
Special departmental
Capital expenditures
Debt service:

Principal
Interest
Total expenditures
Excess of revenues over
(under) expenditures
Other Financing Sources (Uses):

Transfers in (note 3)Transfers out (note 3)
Total other financing sources (uses)
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year
$ 13,648,211
601,823
11,017
(78,423)
1,514,236
582,481
16,386,442
1,817,413
2,687,161
849,889
723,883
1,022,359
2,203,199
820,239
40,513
111,331
126,860
10,150
10,412,997
5,973,445
13,818
(18 5,j)
8)
5,801,497
6,787,313
$ 12588,810
11,221
46,334
See accompanying notes to the financial statements
28 - 21,479
2,184,653 -
- 58,423
79,902
1,845,595
14,093
63,748
1,845,595 135,396
i21Q8 (55,494)
(5,000)
(5,000)
334,058 (55,494)
(334Q) 5,773,570
- 5,718,076
Tot&s
Nonmajor
Governmental
Funds 2022 2021
173,994 13,822,205 10,220,046
- 601,823 505,968
91,455 102,472 87,505
909 (56,035) 5,353
24,302 3,723,191 1,299,941
- 582,481 444,787
15,143 180,663 185,394
305,803 18,956,800 12,748.994
- 1,817,413 1,642918- 2,687,161 2,746,346- 861,110 636,726 30,465 800,682 702,429
204,090 1,226,449 1083,412
- 1,845,595 1,253,270- 2,203,199 1,569,279
10,782 845,114 695,151
5,073 45,586 21,430
- 175,079 143,776- 126,860 123,299- 10,150 13,713
250,410 12644,398 10,631,749
55,393 6,312,402 2,117,24572,442 86,260 122,838
(8,818) (199,584) (384,338)
63,624 (113,324) (261,500)
119,017 6,199,078 1,855,745125,477 12,352,302 10,496,557 244,494 18,551,380 12,352,302
See accompanying notes to the financial statements
29 CITY OF AVALON
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year ended June 30, 2022
Net changes in fund balances - total governmental funds $ 6,199,078 Amounts reported for governmental activities in the statement of activities is different because:

Governmental funds report capital outlay as expenditures, However, in the statement of activities, the cost of those assets is allocated over theirestimated useful lives as depreciation expense. This is the amount by whichcapital outlays exceeded depreciation in the current period.

Capital outlay 124,219
Depreciation expense (1,069,383)
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debtand changes in other long-term liabilities affect the current financial resourcesof governmental funds. None of these transactions, however, has any affecton net position:

Principal payments 126,861
Change in interest payable on capital leases 827Change in compensated absences (1,493)Change in OPEB obligation and related amounts (602,226)Change in net pension liability and related amounts (141,247) Some revenues reported in the Statement of Activities are not considered to be available to finance current expenditures and therefore are not reported as revenues in the governmental funds. (344,319)
Internal service funds are used by management to charge the costs of self-insurance, employee separation costs and vehicle maintenance to individual funds. The net revenue of certain activities of internal service fundsis reported with governmental activities. (173,753) Internal service fund revenues/expenses representing the cumulative crossover effect of involvement with business-type activities. 103,575 Change in net position of governmental activities $ 4,222,139 See accompanying notes to the financial statements
30 PROPRIETARY FUND FINANCIAL STATEMENTS
Harbor — This fund was established to account for all harbor operations.

Sewer — This fund was established to receive and disburse funds collected through sewer service charge fees and sewer facilities charges. This fund is used for the operation and maintenance ofsewer disposal facilities and the financing of construction for sewer outlets.

Saltwater — This fund was established to receive charges for operation of the City’s saltwaterpumping plants and systems.

Solidwaste — This fund was established to account for solid waste collection and disposal costs.

Avalon Transit — This fund was established to account for the City’s fixed route, dial-a-ride, ferry commuter subsidy, and other transportation operations.

Internal Service Funds — These funds are used to account for the financing of goods and servicesprovided by one or more departments to other departments of the City and to other governmentunits, on a cost reimbursement basis. 31 CITY OF AVALON
Statement of Net Position
Proprietary Funds
June 30, 2022
(With comparative information for the prior year)
Business-type Ac Dvi ties
Harbor Sewer Saltwater
Assets
Current assets:

Cash and ‘nvestments $ 476,265 1,345,415 436,103
Restricted cash and investmer.ts - -
-
Receivables, net:

Accounts 1,290,666 1,418 1,363
Taxes 39,393 137,526 36,757
Leases 2,093,289 - - Interest 385 1,719 500
Grants receivable 75,198 - -
Prepaid expenses 14,085 - -
Total current assets 3,989,281 1,489,198 474,723
Noncurrent assets:

Capital assets, not being depreciated 903,939 19,000 -
Capital assets, net of accumulated
depreciation 11,490,007 3,916,317 1,318,127
Total noncurrent assets 12,393,946 3,937,317 1,318,127
Total assets 16,383,227 5,426,515 1,792,850
Deferred outflows of resources:

Deferred outflows -parisian related 517,922 44,361 27,382Deterred outflows - ODES related 487,794 60,626 38,619 Total deferred outflows of resources 1,005,716 104,987 66,001 La bilities:

Current lie out es:

Accounts payable 183,993 258,492 27,571tnteresr payable - Accrued labililies 34,372 2,695 1,668
Unearned revenue 195,879 - -
Other liabilties - 25,000 -Due to other funds -
-
Current portion of noncurrent liabil:ties 158.961 8,021 4460 Total current liab,lit,es 573.205 294,208 33,699
Noncurrent liabilities:

Compensated absences 86,579 2,803 2,402
Advances from other funds - 136,217 50,772
Net pension liability 2,181,354 186,837 115,333
OPEB obligation 2,821,783 350,709 223,402Claims payable - 25,000 - Landfill closure obligation (note 11) - - -
Total noncurrent liabilities 5.089.716 701,566 391,909Total liabilities 5,662,921 995,774 425,608 Deferred inflows of resources:

Deferred inflows . pension related 2,088,179 178,857 110,407 Deferred inflows . ODES related 340,258 42,289 26,938Deferred inflows - lease related 2072,S09 -
Total deferred inflows of resources 4,500,946 221,146 137345 Net position:

Investment :n capital assets 12,393,946 3,937,317 1318,127Unrestricted (5,168,870) 377,265 (22,229) Total net position $ 7,225,076 4,314,532 1,295,898
Adjustme’t to report the cumulative interal balance for the net effect of the activity between the internal service funds and the enterprLse funds over time Net position of business-sype actvities
See accompanying notes to the financial statements
32 Governmental Activities - Business-type Act’vit’es Total Enterprise Funds Internal Service Fur,ds Solidwaste Avalon T’ansit 2022 2021 2022 2021
1,364,570 - 3,625,413 2,563,787 1,272,275 1,316,11?
2,635,796 - 2,635,796 2,683,396 - -
17,900 - 1,371,347 616,565 - -
86,198 - 299,874 135,559 - -
-
- 2,093,289 2,514,345 - -
1,985 - 4,649 582 1,831 347
-
- 75,198 - - -
-
- 14,085 - - -
4,166,449 - 10,119,651 8,511234 1,274.106 1,316,464
-
- 922,939 365,042 - -
275,339 23,108 17,024,898 37,759,669 255,359 335,533275,339 23,108 17,947,837 38,134,711 255,359 335,533 4,441,788 23,108 28,057488 26,645,945 1,529,465 1,651,997 -
- 589,665 643,185 30,080 12,324
-
- 587,039 572,076 - -
-
- 1,176,704 1,215,261 30,080 12,324
135,507 37,902 643,465 690,028 105,609 123,142
-
-
- 2,217 - -
654 307 39,696 92,961 53,365 73,168
25,341 - 221,220 126,526 - - - - 25,000 - - -
- -
- 600,162 - -
1,426 - 172,868 230,735 - -
162,928 38.209 1,102,249 1,742,629 158,974 196,310
768
- 92,552 91,574 - -
-
- 186,989 245,419 - -
-
- 2,483,524 4,572,984 126,695 87,632
-
- 3,395,894 3,749,059 - -
-
- 25,000 25,000 98,295 142,208
5,165,309 - 5,165,309 4,627,461 - -
5,166,077 - 11,349,268 13,311,497 224,990 229,8405,329,005 38,209 12,451,517 15,054,126 383,964 426,150 -
- 2.377,443 528,123 121,283 10,120
-
- 409,485 180,239 - - - - 2.072.509 2,514,345 - — -- 4,859,437 3,222,705 121,283 10,120 275,339 23,108 17,947,831 18,080,970 255,359 335,533
(1,162,556) (38.209) (6,014,599) j49j95 798 939 892,518 (887,217) (15,101) 11,933,238 9,58’,375 1,054,298 1,228,051 (193,639) (90,064)
$ 11,739,599 9,494,313
See accompanying notes to the financial statements
33 CITY OF AVALON
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
Year ended June 30, 2022
(With comparative information for the prior year)
Business-type Activities
Harbor Sewer Saltwater
Operating revenues:

Charges for services $ 8,661,810 2,981,666 874,239
Other revenue 103,076 - -
Total operating revenues 8,764,886 2,981,666 874,239
Operating expenses:

Salaries and benefits 3,169,043 647,392 336,286
Contractual services 1,098,184 1,299,961 283,185Office supplies 3,471 - -Utilities and rent 493,271 267,499 - Repairs and maintenance 456,277 221,911 14,911
Operating supplies 276,371 945 59Other services and charges 345,467 40,602 800Depreciation 567,206 433,305 47,923 Total operating expenses 6,409,290 2,911,615 683,164
Operating income (loss) 2,355,596 70,051 191,075
Nonoperating revenues (expenses):

Admissions taxes 236,156 - -
Loss on disposal of capital assets - - -
Grants and other revenues - - -Interest income 31,234 5,708 26,282 Interest expense (202) (5,839) (2,17)
Total nonoperating revenues
(expenses) 267,188 (131) 24,106
Income (loss) before capital contributions
and transfers 2,622,784 69,920 215,181
Transfers in (note 3) - - -
Transfers out (note 3)
Total transfers — — -
Changes in net position 2,622,784 69,920 215,181
Net position, beginning of year 4,602,292 4,244,662 1,080,717Net position, end of year $ 7,225,076 4,314,582 1,295,898 Adjustment for the net effect of current year activity between the internal service funds and the enterprise funds.

Change in net position of business-type activities
See accompanying notes to the financial statements
34 Governmental Activities -
Business-type Activities Total Enterprise Funds Internal Service Funds Solidwaste Avalon Transit 2022 2021 2022 2021
2,346,729 78,463 14,942,907 12,982,452 3,460,917 2,756,742 -
- 103,076 13,808 - -
2,346,729 78,463 15,045,983 12,996,260 3,460,917 2,756,742 229,185 132,943 4,514,849 4,791,894 1,831,819 1,297,653 2,253,870 71,675 5,006,875 4,797,787 695,088 532,630
-
- 3,471 3,236 77,342 59,938
11,905 - 772,675 902,689 143,327 181,628
- 4,328 697,427 364,895 116,068 51,082
-
- 277,375 242,100 48,825 32,861
- 20,197 407,066 686,322 635,909 465,225
66,986 5,416 1,120,836 1,148,252 92,168 97,363
2,561,946 234,559 12,800,574 12,937,175 3,640,546 2,718,380 (215,217) (156,096) 2,245,409 59,085 (179,629) 38,362
-
- 236,156 191,884 - -
- -
- (2,059) - -
8,695 - 8,695 31,378 - -
(309,728) - (246,504) 131,164 5,876 7,285
- (8,217) (12,474) - -
(301,033) - (9,870) 339,893 5,876 7,285
(516,250) (156,096) 2,235,539 398,978 (173,753) 45,647
- 113,324 113,324 261,500 - -- 113,324 113,324 261,500
(516,250) (42,772) 2,348,863 660,478 (173,753) 45,647(370,967) 27,671 1,228051 1,182,404(887,217) (15,101) 1,054,298 1,228,051 (103,575) 22,682
$ 2,245,288 683,160
See accompanying notes to the financial statements
35 CITY OF AVALON
Statement of Cash Flows
Proprietary Funds
Year ended June 30, 2022
(With comparative information for the prior year)
Harbor Sewer Saltwater
Cash Flows from Ooerating Activities:

Cash received from customers $ 8006,648 2,898,912 849,165Cash received from interfund services provided - -Cash received for opeating grants - - -Cash payments to suppliers for goods and services (2,642,058) (1,908,365) (360,80])Cash payments ro employees for services (4,003,375) (550,691) (289,29) Net cash provided by operating activities 1,361,215 439,856 199,062 Cash Flows from Norcapital Financ Pg Act vities:

Cash received from admissions taxes 236,156 - -Cash received from leases 421,322 Cash paid to other funds (600,162) (42,565) (15,865)Cash received from othe’ funds - - - Net cash provided by noncapital financing activities 57,316 (42,565) (15,86) Cash Flows from Capital and Related Financing Activities:

Cash payments to acquire capital and other assets (916,724) (23,125) (8,196) Principal paid on capital-related debt (53,73]) - -Interest paid on capital-related debt (2,419) (5,839) (2,17) Net cash provided by capital and related financing (972,880) (28,964) (1D,37) activities
Cash Flows from Investing Activities:

Sale of investments held for resale - - -Interest received on investments 30,614 4,082 25,809 Net cash provided by investing activities 30,614 4,082 25,809Net increase (decrease) in cash and cash equivalents 476,265 372,409 198,634 Cash and cash equivalents - beginning - 976,066 231,469Cash and cash equivalents - ending $ 476,265 1,348,475 436,103 Reconciliation of Operating Income (loss) to Net Cash
Provided by Operating Activities
Operating income (loss) $ 2,355,596 70,051 191,075Adjustments to reconcile operating income (loss) to net cash provided by oparat ng activities
Depreciaton 567,206 433,305 47,923
Other Income -Changes in operating assets and I abilities:
(Increase) decrease in accounts recevable (678,014) (1,418) (1,362)(Increase) decrease in taxes receivable (80,224) (81,336) (23,112) (Increase) decrease in deferred outflows 63,087 (16,425) (8,105)Increase (decrease) in accounts payable 81,927 (98,224) (59,185)Increase (decrease) in accrued liabil,ties (44,997) (4,223) (2,667)Increase (decrease) in other liabilities - 25,000 - Increase (decrease) in compensated absences 3,324 (125) 498Increase (decrease) in OPEB obligation (343,529) (508) (9,128) Increase (decrease) in unearned revenue 72,998 - -
Increase (decrease) in net pension liability (1,983,636) (61,789) (44,035) Increase (decrease) in defe’red inflows 1,353,424 175,548 101,760Increase (decrease) in landfill closure obligation - - -Increase (decrease) in claims payable (5,947) - - Net Cash Provided by Operating Activities $ 1,361,215 439,856 199,062 Significant non-cash transactions
Landfill closure cost amortization $ -
See accompanying notes to the financial statements
36 Governmental Activities -
Total Enterprise Funds Internal Service Funds
Solidwaste Avalon Transit 2022 2021 2022 2021
2,218,500 77,951 14,051,176 13,131,019 - -
- - -
- 3,460,917 148,670
8,695 - 8,695 10,110 - -
(1,738,569) (58,409) (6,708,208) (6,843,036) (1,784,575) (1,259,521) (207,489) (132,943) (5,183,794) (4,106,706) (1,712,582) 1,304,587 281,137 (113,401) 2,167,869 1,591,447 (36,240) 193,736
-
- 236,156 191,884 - -
421,322 -
-
- (658,592) (49,022) - -
- 113,324 113,324 861,662 - -
113,324 112,210 1,004,524
-
- (948,045) (1,661,948) (11,994)
-
- (53,737) (51,422) -
-
- (10,434) (14,595) - -
(1,012,216) (1,727,965) (11,994) -
- -
- 15,000 - -
(311,342) - (250,837) 133,685 4,392 8,090(311,342) (250,837) 148,685 4,392 8,090 (30,205) (77) 1,017,026 1,016,691 (43,842) 201,826
4,030,571 77 5,244,183 4,227,492 1,316,117 1,114,2914,000,366 - 6,261,209 5,244,183 1,272,275 1,316,117 (215,217) (156,096) 2,245,409 59,085 (179,629) 38,362
66,986 5,416 1,120,836 1,148,252 92,168 97,363
8,695 - 8,695 31,318 - -
(73,988) - (754,782) (372,780) - 75,163(54,241) - (239,513) 485,900 - - -
- 38,557 (189,642) (17,756) 4,487
(8,874) 37,791 (46,565) (199,583) (17,533) (25,597)
(866) (512) (53,265) 9,361 (19,803) (2,625)
-
- 25,000 - - -
(902) - 2,195 (21,534) - -
-
- (353,165) 538,150 - -
21,696 - 94,694 (19,341) - -
-
- (2,089,460) 9,943 111,163 (5,052)
-
- 1,636,732 (231,875) 39,063 (9,777)
537,848 - 537,848 367,171 - -
- (5,947) (23,038) (43,913) 21,412
281,137 (113,401) 2,167,869 1,591,447 (36,240) 193,736537,848 - 537,848 367,111 See accompanying notes to the financial statements
37 CITY OF AVALON
Statement of Fiduciary Net Position
Private Purpose Trust Fund
June 30, 2022
(With comparative information for the prior year)
2022 2021
Assets:

Current assets:

Cash and investments (note 2) $ 2,263,674 2,325,715
Interest receivable 44 19
Total current assets 2,263,718 2,325,734
Liabilities:

Current liabilities:

Due to other governments 6,043 6,043
Interest payable 265,887 284,724
Current portion of long-term liabilities:

Bonds payable (note 5) 1,267,962 1,308,954
Total current liabilities 1,539,892 1,599,721
Long-term liabilities:

Bonds payable (note 5) 16,667,038 17,856,046Bond premium 449,572 530,536 Total long-term liabilities 17,116,610 18,386,582
Total liabilities 18,656,502 19,986,303
Net position:

Held in trust for successor agency (16,392,784) (17,660,569) Total net position (deficit) $ (16,392,784) (17,660,569) See accompanying notes to the financial statements
38 CITY OF AVALON
Statement of Changes in Fiduciary Net Position
Private Purpose Trust Fund
Year ended June 30, 2022
(With comparative information for the prior year)
2022 2021
Additions:

Taxes $ 2,251,114 2,342,326
Investment income 140 310
Total additions 2,251,254 2,342,636
Deductions:

Community development 257,350 261,150Interest 726,119 776,213 Total deductions 983,469 1,037,363
Change in net position 1,267,785 1,305,273
Net position, beginning of year (17,660,569) (18,965,842) Net position, end of year S (16,392,78J (17,660,569)
See accompanying notes to the financial statements
39 (This page intentionally left blank)

CITY OF AVALON
Notes to the Financial Statements
Year ended June 30, 2022
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Avalon, California, (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America.

The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The moresignificant of the City’s accounting policies are described below. (a) Description of the Reporting Entity
The City of Avalon was incorporated in 1913 under the General Laws of the State of California. The City operates under a Council-Manager form of government and provides the following municipal services to its citizens: public safety (police and fire), harbor,streets, water sanitation, health and social services, public improvements, planning andzoning, and general administrative services.

The financial reporting entity presented in the accompanying basic financial statements consists of the primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance oftheir relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. (b) Basis of Accounting and Measurement Focus
Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resourcesmeasurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financialstatements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements.

Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, andliabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from non-exchange transaction are recognized in accordance with therequirements of GASB Statement No. 33.

Government-wide Financial Statements
Government-wide financial statements display information about the reportinggovernment as a whole, except for its fiduciary activities. These statements includeseparate columns for the governmental and business-type activities of the primary government (including its blended component units). Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated), However, general government expenses have not been allocated as indirect expenses to the various functions of the City. 40 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) Program revenues include charges for services and payments made by parties outside of the reporting government’s citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the Statement of Activities to present the net cost of each program. Taxes and other items not included among program revenues are reported instead as general revenues.

As a general rule the effect of interfund activity has been eliminated from the government-wide statements. Amounts paid to acquire capital assets have beenreclassified as an addition to the related asset in the government-wide financial statements, rather than reporting them as expenditures. Proceeds of long-term debtare recorded as a liability in the government-wide financial statements, rather than another financing source. Amounts paid to reduce long-term indebtedness of the reportinggovernment are reported as a reduction of the related liability, rather than as anexpenditure.

The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. Theoperations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate.

Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Net position is classified in the following categories:

In the government-wide financial statements, net position is reported in one of three categories:• Net Investment in Capital Assets — This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to theacquisition, construction, or improvement of capital assets. • Restricted Net Position — This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. • Unrestricted Net Position — This amount is all net position that does not meet the definition of “Net Investment in Capital Assets” or “Restricted Net Position”.

Fund Financial StatementsFund financial statements for the primary government’s governmental, proprietary, and fiduciary funds are presented after the government-wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and proprietary funds. Fiduciary statements include 41 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) financial information for fiduciary funds and similar component units. Fiduciary funds ofthe City primarily represent assets held by the City in a custodial capacity for other individuals or organizations.

Governmental Funds
In the fund financial statements, governmental funds are presented using the modifiedaccrual basis of accounting. Their revenues are recognized when they becomemeasurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts werecollected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses a sixty day availability period. The City accrues the following revenue types: taxes, licenses, fines and forfeitures, and other miscellaneous revenues.

Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Lxchange transactions arerecognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they arerecognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary nonexchange transactions are recognized as revenues when all applicable eligibility requirements have been met.In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of available spendable resources.Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the yearthat resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. 42 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) Governmental Fund Balances
Fund balances are reported in the fund statements in the following classifications:

Nonspendable Fund Balance
NonsDendable Fund Balance — this includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contractually required to be maintained intact (such as endowments).Spendable Fund Balance Restricted Fund Balance — This includes amounts that can be spent only for specific purposes stipulated by legal requirements imposed by other governments, external resource providers, or creditors. City Council imposed restrictions do not createrestricted fund balance unless the legal document that initially authorized the revenue(associated with that portion of fund balance) also included language that specified thelimited use for which the authorized revenues were to be expended.

Committed Fund Balance — This includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council. Those committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action (for example, resolution, ordinance, minutes action, etc.) that it employed to previously commit those amounts. If the Council action that limits the use of the funds was separate from theaction that initially created the revenues that form the basis for the fund balance, then the resultant fund balance is considered to be committed, not restricted. The City considers a resolution to constitute a formal action of the City Council for the purposesof establishing committed fund balance.

Assigned Fund Balance — This includes amounts that are intended to be used for specific purposes as indicated either by the Council or by persons to whom authority has been delegated to assign amounts for specific purposes. The City Council has not delegated such authority as of the date of this report.

Unassigned Fund Balance — This includes the remaining spendable amounts which arenot included in one of the other classifications.It is the City’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of aformal policy adopted by the City Council.

Proprietary and Fiduciary Funds
The City’s enterprise funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues arerecognized when they are earned, and expenses are recognized when the related goods 43 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements presentincreases (revenues) and decreases (expenses) in total net position.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions arethose in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies, taxes, and investment earnings result from non-exchange transactions or ancillary activities. Operating expenses for enterprise funds include thecost of sales and services, administrative expenses, and depreciation on capital assets.

All revenues and expenses not meeting this definition are reported as nonoperatingexpenses. Amounts paid to acquire capital assets are capitalized as assets in the proprietary fund financial statements, rather than reported as an expense. Proceeds of long-term debt are recorded as a liability in the proprietary fund financial statements, rather than as another financing source.

Amounts paid to reduce long-term indebtedness of the proprietary funds are reported as a reduction of the related liability, rather than as expenditure.

The private-purpose trust funds are reported using the economic resources measurement focus and the accrual basis of accounting.
(c) f4jor Funds and Fiduciary Fund Types
The City reports the following major governmental funds:

General Fund — The General Fund is the general operating fund of the City. All general tax revenues and other receipts not allocated by law or contractual agreement to other funds are accounted for in this fund. Expenditures of this fund include general operating costs not paid through other funds.

Local Transportation Fund — The Local Transportation Special Revenue Fund is used torecord Measure R funds, Prop 16 funds, and allocations made by the Los Angeles County Transportation Commission for the construction of streets, roads, bikeways, pedestrian facilities and the City’s transportation system. Separate annual audited financialstatements from the Los Angeles County Metropolitan Transportation Authority (MTA) can be obtained from the City at www.cityofavalon.com/finance.

Avalon Housing Authority Fund — The Avalon Housing Authority Fund is used to account for the activity of the City’s continuing housing operations. This fund was created effective February 1, 2012 in response to legislation enacted by the State of California to dissolve California Redevelopment Agencies. Separate Annual Housing Reports can be obtained from the City at www.cityofavalon.com/finance. 44 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) The City reports the following major enterprise funds:

Harbor Fund — The Harbor Fund is used to account for all harbor operations.

Sewer Fund — The Sewer Fund is used to receive and disburse funds collected through sewer service charge fees and sewer facilities charges. These funds are used for the operation and maintenance of sewer disposal facilities and the financing of constructionof outlet sewers.Saltwater Fund — The Saltwater Fund is used to receive charges for operation of the City’s saltwater pumping plants and systems.Solidwaste Fund — The Solidwaste Fund is used to account for solid waste collection and disposal costs.Avalon Transit Fund — The Avalon Transit Fund is used to account for the City’s fixed route, dial-a-ride, ferry commuter subsidy, and other transportation operations.

The City reports the following fund types:

Special Revenue Funds — Used to account for the proceeds of specific revenue sources that are legally restricted or otherwise designated for specific purposes.

Internal Service Funds — Used to account for the financing of goods and servicesprovided by one or more departments or agencies to other departments or agencies of the City and to other government units, on a cost reimbursement basis.Additionally, the City reports the following fiduciary fund type:

Private Purpose Trust Fund — Used to account for the activities related to the Successor Agency to Avalon Community Improvement Agency (ACIA) and the revenue receivedfrom the Redevelopment Property Tax Trust Fund (RPTTF) to fund the recognized obligations of ACIA and administrative costs.
(d) Cash and Investments
The City pools cash and investments of all funds, except for assets held by fiscal agents.

Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by pooled investments is allocatedto the various funds based on each fund’s average cash and investment balance.

Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.
45 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) For purposes of the statement of cash flow, cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition.
(e) Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangementsoutstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmentwide financial statements as internal balances.

Externally related transactions are accounted for as revenue, expenditures, or expenses, as appropriate. Transactions that constitute reimbursements to a fund for expenditures /expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursed fund. All other interfund transactions,except quasi-external transactions and reimbursements, are reported as transfers. (f) Capital Assets and Depreciation
Capital assets, which consist of land, buildings and improvements, improvements otherthan buildings, machinery and equipment, vehicles, infrastructure, and construction in progress, are reported in the government-wide financial statements. Capital assets are defined by the City as assets with an initial cost of more than $5,000 and an estimatedlife in excess of one year; and infrastructure assets of more than $50,000. Such assetsare recorded at historical cost or estimated historical cost if purchased or constructed.

Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the government-wide statements. Depreciation is charged as an expense against operations, and accumulated depreciation is reported in the respective statement of net position. The ranges of estimated useful lives used for depreciation purposes for each capital asset class are as follows:

Buildings and improvements 20 - 50 yearsImprovements other than buildings 5 - 20 yearsMachinery and equipment 5 - 20 years Vehicles 5 - 20 years
Infrastructure 10 - 50 years
46 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) (g) Compensated Absences
The City is obligated to compensate employees for all earned but unused vacation days accumulated. Liabilities for vacation, holiday benefits, sick pay and compensatory time are recorded as earned by employees. City employees earn from 10 to 20 vacation dayseach year, depending upon length of service.

In governmental funds, compensated absences (accumulated vacation, holiday benefits, sick pay and compensatory time) are recorded as an expenditure and a fund liability of the governmental fund that will pay them (primarily the General Fund), if they are expected to be liquidated with currently expendable available resources. The balanceof unpaid compensated absences is recorded as a long-term liability, as these amounts will be liquidated from future resources rather than currently expendable availableresources upon retirement or separation of employment. The expenses for accumulatedcompensated absences are recorded in the General Administration Internal Service Fund. Unpaid compensated absences in proprietary funds are recorded as liabilities in those funds as vested benefits to the employees.
(h) Property Taxes
Property taxes are levied annually in July by the Los Angeles County Assessor for the succeeding fiscal year. Taxes are billed in August and are due and collectible in first andsecond installments on November 1 and March 1, respectively. The first installment is considered delinquent if not paid by December 10, and the second installment isconsidered delinquent if not paid by April 10 of each year. All unpaid taxes as of January I of the following year are considered delinquent and attach an enforceable lien on the related property on that date.

Distributions of collected property taxes to the City are made by the County in accordance with the following schedule:

Secured:
350/o of tax levy December
S0/o of tax levy JanuaryBalance of first installment collections February 75°/o of adjusted tax, less previous remittance April
Balance of second installment collections MayBalance of collections for fiscal year July/August Unsecured:
80% of tax levy August
Balance of March - August collections OctoberSeptember - December collections March January -June collections August
47 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) (i) Deferred Outflows/Inflows of Resources
When applicable, the statement of net position and balance sheet will report a separatesection for deferred outflows of resources. Deferred outflows of resources represent outflows of resources (consumption of net position) that apply to future periods and that, therefore, are not recognized as an expense or expenditure until that time. The City has two items that qualify for reporting in this category, deferred outflow of resources for pension and deferred outflow of resources for Other Post-EmploymentBenefits (“OPEB”).

When applicable, the statement of net position and the balance sheet will report aseparate section for deferred inflows of resources. Deferred inflows of resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as an inflow of resources (revenue) until that time. The City has four items that qualify for reporting in this category, deferred inflows — pension related, deferred inflows — OPEB related, deferred inflows — leases related, and unavailable revenue.
(j) Pensions
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by the CaIPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms,Investments are reported at fair value. CaIPERS audited financial statements are publicly available reports that can be obtained at CaIPERS’ website under Forms and Publications.

GASB 68 requires that the reported results must pertain to liability and asset informationwithin certain defined timeframes. For this report, the following timeframes are used:

Valuation Date (VD) June 30, 2020
Measurement Date (MD) June 30, 2021Measurement Period (MP) June 30, 2020 to June 30, 2021 (k) Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to aPES, and OPEB expense and information about the plan (OPEB Plan), have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
48 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) Generally accepted accounting principles require that the reported results must pertain to liability information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date (VD) June 30, 2020
Measurement Date (MD) June 30, 2021Measurement Period (MP) June 30, 2020 to June 30, 2021 (I) Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques usedto measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 — Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
• Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are inactive;
• Inputs other than quoted prices that are observable for the asset or liability; • Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptionsabout the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data. (m) Use of Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial statementsand the reported amounts of revenues and expenditures during the reporting period.Actual results could differ from those estimates. 49 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies (Continued) (n) PriorYear Data
Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Accordingly, such information should be read in conjunction withthe government’s prior year financial statements, from which this selected financial data was derived. In addition, certain minor reclassifications of the prior year data have been made to enhance their comparability to the current year. (o) For the year ended June 30, 2022, the financial statements include the adoption of GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency of information about governments’ leasing activities. This statement establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. Under this statement, alessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.

At the commencement of the lease, the city initially measures the lease receivable atthe present value of payments expected to be received during the lease term.

Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the leasecommencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines the discount rate it uses to discount the expected lease receipts to present value, lease term, and lease receipts.The City used the estimated incremental borrowing rate as the discount rate for leases.The lease term includes the noncancellable period of the lease. Lease receipts included the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of it leases, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
50 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(2) Cash and Investments
Cash and investments at June 30, 2022 are classified in the accompanying financial statements as follows:

Primary
Government
Statement of net position
Cash and investments 21,322,791
Restricted cash and investments 2,635,796
Statement of fiduciary net position
Cash and investments 2,263,674
Total cash and investments 26.222.261
Cash and investments at June 30, 2022 consisted of the following:

Primary
Government
Petty cash $ 500Demand deposits 3,908,998Investments 18,083,135 Investments with fiscal agent 4,229,628
Total cash and investments S 26.222.261
51 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(2) Cash and Investments (Continued
Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code, or the City’s investment policy where more restrictive. The table also identifies certain provisions of the California Government Code, (or the City’s investmentpolicy where more restrictive, that address interest rate risk, credit risk, and concentration ofcredit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. Investments held by fiscal agent of $2,635,796 is jointly registered in the name of the City and Cal Recycleand is not subject to the City’s investment policy.

Maximum Maximum
Percentage or Investment
Authorized Maximum Amount of in One
Investment Type Maturity Portfolio Issuer
United States Treasury Obligations 5 years N/A N/A
Certificates of Deposits 5 years N/A $ 250,000
Local Agency Investment Fund (LAIF) N/A $ 75,000,000 75,000,000Los Angeles County Investment Fund (LACIF) N/A N/A N/A
Money Market Mutual Funds N/A 15°/s N/A
‘Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

N/A - Not Applicable
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or theCity’s investment policy. Investments authorized for funds held by the bond trustee include United States Treasury Obligations or any other federal agency obligations for which the full faith and credit of the United States are pledged for payment of principal and interest, United States Government Sponsored Agency Securities, Commercial Paper, Local Agency Bonds, Banker’s Acceptances, Money Market Mutual Funds and Investment Contracts. There were no limitations on the maximum amount that can be invested in one issuer, maximumpercentage allowed or the maximum maturity of an investment, except for the maturity of Banker’s Acceptances, which are limited to one year.

Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City 52 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(2) Cash and Investments (Continued
manages their exposure to interest rate risk is by purchasing, a combination of shorter term and longer-term investments and by timing, cash flows from maturities so that a portion ofthe portfolio is maturing or coming, close to maturity evenly overtime as necessary to providethe cash flow and liquidity needed for operations. Information about the sensitivity of the fairvalues of the investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of theinvestments by maturity:

Remaining Maturity
(in Months)
Investment Type: Total Within 12 Beyond 12
LAW $ 15,712,211 15,712,211 -
Certificate of deposits 2,370,924 2,370,924 -
Held by trustee:

Money market mutual funds 1,593,832 1,593,832 -Mutual funds 2,635,796 2,635,796 - Total $ 22,312,763 22,312,763 -
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating as requiredby (where applicable) the California Government Code, the City’s investment policy, or debtagreements, and the actual rating, as reported by Standards and Poors, as of year-end foreach investment type:

Minimum Legal Rating
Investment Type: Total Rating AAA Unrated
LAIF $ 15,712,211 N/A - 15,712,211Certificate of deposits 2,370,924 N/A - 2,370,924 Held by bond trustee:

Money market mutual funds 1,593,832 A 1,593,832 -Mutual funds 2,635,796 A 2,635,796 - Total $ 22,312,763 4,229,628 18,083,135
53 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(2) Cash and Investments (Continued
Fair Value Measurement
The City categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2022:

Fair Value Hierarchy
Level 1 Level 2 Level 3 Total
Certificates of deposit $ 2,370,924 - 2,370,924
Held by trustee:

Mutual funds 2,635,796 - - 2,635,796
Investments not subject to fair
value hierarchy:

LAIF - - - 15,712,211Money market mutual funds - - - 1,593,832 Total S 2,635,795 2,370,924 22,312,763
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code.

Custodial Credit Risk:Custodial credit risk for deposits is the risk that, in the event of the failure of a depositoryfinancial institution, a government will not be able to recover its deposits or will not be ableto recover collateral securities that are in the possession of an outside party. The custodialcredit risk for investments is the risk that, in the event of the failure of the counterpart (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of itsinvestment or collateral securities that are in the possession of another party. The CaliforniaGovernment Code, and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other thanthe following, provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securitiesin an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit).

The market value of the pledged securities in the collateral pool must equal at least llO°/o ofthe total amount deposited by the public agencies. California law also allows financial institutions to secure the City’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2022, the City’s deposits (bank balances) were insured by the Federal Deposit Insurance Corporation or collateralized as required under California Law.
54 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(2) Cash and Investments (Continued)
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is (reported inthe accompanying financial statements at amounts based upon the City’s pro-rata share ofthe lair value provided by LAIF for the entire LATE portfolio (in relation to the amortized costof that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. (3) Interfund Balances and Transfers
The composition of nterfund balances as of June 30, 2022, is as follows:

Advances to Advances from
other funds other funds Amount
General Fund Sewer Fund $ 136,217 (a)
General Fund Saltwater Fund 50,772 (a)
$ 186,989
(a) The advances from the General Fund to the Sewer and Saltwater funds were to provide financial assistance for capital improvements to the water and wastewater systems.

Fund Reporting Fund Reporting
Payable Receivable Arrount
Local Transportation Fund General Fund $ 386,351 (a)
Avalon Housing Authority General Fund 26,500 (b)
$ 412,851
(a) These amounts due to the General Fund are short-term borrowings to cover negative cash balances.
(b) This amount due to the General Fund is a short-term borrowing to cover administrative expenses.
55 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(3) Interfund Balances and Transfers (Continuedi
Transfers in
Avalon Transit Fund
Non-Major Gov’t Funds
General FundGeneral Fund
General FundGeneral Fund
Non-Major Govt FundsLocal Transportation Fund
(a) To transfer funds from the General Fund to the Avalon Transit fund to cover operating expenses.
(b) To transfer funds from the General Fund to the Traffic Control ($46,580) and CDBG ($25,862) non-major governmental funds to cover operations expense within the funds. (c) To transfer funds from the Street non-major governmental fund to the General Fund to fund street related capital expenditures used as local matching funds. (d) To transfer funds from the Local Transportation Fund to the General Fund ($5,000) to cover capital related expenditures.
(4) Capital Assets
A summary of changes in the capital assets at June 30, 2022 is as follows:

Balance at
7/112021
Land
Construction in progress
Total non-depreciable assets
Depreciable assets:

Building and irrprovements
Irrprovennts other than buildings
Machinery and equiprrnt
Total depreciable assets
Less accuniilated depreciation:

Buildings and iruproverrentsIrrproverrents other than buildings Machinery and equiprrent
Total accunilated depreciation
Total depreciable assets
Total capital assets
$ 2,852,600
1,057,999 113,117
3,910,599 113,117
9,563,598 -
18,286,611 17,063
3,639,575 23,095
31,489,784 40,158
(4,301,546) (241,020)
(11,299,246) (789,646)
(3,164,530) (130,885)
(18,765,322) (1,161,551)
12,724,462 (1,121,393)
$ 16,635,061 (1,008,276)
(17,063)(17,063)
(62,381)
(62,381)
62,38162,381
(17,063)
2,852,600
1,154,053
4,006,653
9,563,598
18,303,674
3,600,289
31,467,561
(4,542,566)
(12,088,892)
(3,233,034)
(19,864,492)
11,603,069
15,609,722
Transfers out Arm u nt
$ 113,324
72,442
8,818
5,000
$ 199,584
(a)(b)
(c)(d)
Govemrrental Activities;
Non-depreciable assets;
Additions Deletions
Balance at
6/30/2022
56 (4) Capital Assets (Continued)

CITY OF AVALON
(Continued)
Non-depreciable assets:

Construction in progress
Depreciable assets:

Buildings and irrprovementstrrproverrnts other than buildings Machinery and equipmentInfrastructure
Total depreciable assets
Less accurrulated depreciation:

Buildings and irrprovermnts
lmprovenents other than buildingsMachinery and equipn-entInfrastructure Total accurrijlated depreciation
Total depreciable assetsTotal capital assets
5,488,996
20,472,909
3,664,636
6,302,971
35,929,512
922,939
5,488,996
20,358,481
3,603,816
-
- 6,311,167
(544,642) - 35,762,460
(3,239,067)
(10,476,050)
2, 494, 270)
(2,528,175)
(18,737,562)
17,024,898
17,947,837
Depreciation expense was Charged to functions! programs of the governmental activities as follows
Governmental Activities
Public safetyPlanning, buikfing and engineering
Community services
Public works
General government
Internal service funds depreciation charged to progrant Total depreciation expense - governmental activities
Business-TvDe Activities
Harbo
Sewer
Salt water
Solid waste
Avalon Transit
Total depreciation expense - business-type activities
$ 11,456
25,269
200,002
534,773297,883
92,168
S 1,161,551
S 567,206
433,305
47,923
66,986
5,416
$ 1,120,836
Notes to the Financial Statements
Balance at Balance at
Business-Tvoe Activities 7/1/2021 Additions Deletions 6/30/2022 S 365,042 557,897
Transfers
275,078
94,316
8, 196
377,590
(389,506)(155,136)
(3,131,562) (101,505)(9,821,062) (654,988) -(2,883,441) (143,785) 532,956 (2,317,719) (220,558) 10,162
(18,159,844) (1,120,836) 543,118
17,769,668 (743,246) (1,524)
S 18,134,710 (185,349) (1,524)
57 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(5) Long-term Liabilities
A summary of changes in long-term liabilities for the year ended June 30, 2022 is as follows:

Balance at Balance at Due Within One
7/1/2021 Additions Deletions 6/30/2022 Year
Governmental Activitiescompensated absences $ 427,954 7480 (5,986) 429,448 279,141claims payable 142,209 - (43,914) 98,295 - Lease liability 351196 - (126860) 224,336 130,526
Total Governmental $ 921,359 7,480 (176,760) 752,079 409,667 Business-type Activities
State Department of
Boating & Waterways Loan $ 53,737 - (53,737) - -
Compensated absences 261,640 4,605 (1,810) 264,435 171,883claims payable 31,932 - (5,947) 25,985 985 Total Business-type $ 347,309 4,605 (61,494) 290,420 _78AdA Successor Aoencv Bonds Payable:
2003A TAB $ 1,360,000 - - 1,360,000 -2015A TAB 13,050,000 - (945,000) 12,105,000 900,000 2015B TAB 4,755,000 - (285,000) 4,470,000 295,000Bond premium 530,536 - (80,964) 449,572 72,962 Total ACIA Successor Agency $ 19,695,536 - (1,310,964) 18,384,572 1,267,962 Compensated absences have typically been paid from the City’s General Fund and the Enterprise Funds.

AdA Successor Agency Activities
(a) 2003 Tax Allocation Bonds. Series A
On December 3, 2003, the Agency issued $27,350,000 in Tax Allocation Refunding Bonds, Series A, to refund the 1998 Refunding Tax Allocation Bonds and to finance redevelopment activities.Serial bonds mature annually each September 1 through 2023. In addition, term bondsin the amount of $5,890,000 and $6,185,000 mature September 1, 2029 and September 1, 2034, respectively. The term bonds are subject to mandatory sinking fund requirements that commence September 1, 2024 and September 1, 2030, respectively.

The bonds bear interest at rates ranging from 2.00°/s to 4.95%. Interest is payable semiannually, on March 1 and September 1. These bonds were partially refunded on July 1, 2015 through issuance of the 2015 Tax Allocation Bonds. 58 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(5) Long-term Liabilities (Continued)
The annual debt service requirements on these bonds at June 30, 2022, were as follows:

Year ending
June 30, Principal Interest Total
2023 $ - 67,320 67,3202024 - 67,320 67,3202025 - 67,320 67,320 2026 - 67,320 67,3202027 - 67,320 67,320
2028-2032 - 336,600 336,6002033-2035 1,360,000 201,960 1,561,960 Total $ 1,360,000 875,160 2,235,160
(b) 2015 Tax Allocation Refunding Bonds, Series A
On July 1, 2015 the Agency issued $17,160,000 Tax Allocation Refunding Bonds, SeriesA, to partially refund the 2003A Tax Allocation Bonds and fully refund the 2003 TaxAllocation Bonds, Series B. The net proceeds of the 2015A Bonds were deposited intoan irrevocable trust with an escrow agent for payment of a portion of the outstanding 2003A Tax Allocation Bonds. The refunding of a portion of the 2003A Tax AllocationBonds resulted in a reduction in total debt service payments over the next 19 years by$2.2 million, and an economic gain of $1.7 million.

A term bond in the amount of $3,450,000 matures September 1, 2033. The term bond is subject to mandatory sinking fund requirements that commence September 1, 2031, September 1, 2032, and September 1, 2033. The term bond bears interest at the rateof 400%. The 2015 Tax Allocation Refunding Bonds includes principal installments annually from September 2016 to September 2033 with interest payable semi-annually from September 2016 to September 2033 at an interest rate between 2.00/ and

5.00 %•
The annual debt service requirements on these bonds at June 30, 2022, were as follows:

Year ending
June 30, Principal Interest Total
2023 s 900,000 501,838 1,401,8382024 945,000 455,713 1,400,713 2025 995,000 407,213 1,402,2132026 860,000 360,838 1,220,8382027 905,000 316,713 1,221,713 2028-2032 5,155,000 968,156 6,123,156
2033-2034 2,345,000 94,698 2,439,698
Total $ 12,105,000 3,105,169 15,210,169
59 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(5) Long-term Liabilities (Continued
(c) 2015 Tax Allocation Refunding Bonds, Series B
On July 1, 2015, the Agency issued $6,035,000 Tax Allocation Refunding Bonds, Series B, to partially refund the 2003A Tax Allocation Bonds and fully refund the 2003B Tax Allocation Bonds. The net proceeds of the 20158 Bonds were deposited into an irrevocable trust with an escrow agent for payment of a portion of the 2003A Tax Allocation Bonds and a portion of the 20038 Tax Allocation Bonds. As a result of these payments, the 20038 Tax Allocation Bonds are considered defeased, and the liability for the bonds has been removed from the Statement of Net Position. The refunding of a portion of the 2003A Tax Allocation Bonds and the 20038 Tax Allocation Bonds resultedin a reduction in total debt service payments over the next 19 years by $1.0 million, and an economic gain of $0.6 million.

Term bonds in the amount of $1,530,000 and $1,355,000 mature September 1, 2030, and September 1, 2033, respectively. The term bonds are subject to mandatory sinkingfund requirements that commence September 1, 2030 and September 1, 2033, respectively.

The term bonds bear interest at rates of 4.75% and 5.00%, respectively. The 2015 Tax Allocation Refunding Bonds Series B includes principal installments annually from September 2016 to September 2033 with interest payable semi-annually from September 2016 to September 2033 at an interest rate between l.OO% and 5.00%.

The annual debt service requirements on these bonds at June 30, 2022, were as follows:

Year ending
June 30, Principal Interest Total
2023 $ 295,000 200,475 495,475
2024 305,000 188,844 493,8442025 315,000 176,247 491,2472026 330,000 162,738 492,738 2027 340,000 148,074 488,074
2028-2032 1,960,000 477,625 2,437,6252033-2034 925,000 46,875 971,875 Total $ 4,470,000 1,400,878 5,870,878
(d) Pledged Revenues
The ACIA Successor Agency debt issues are collateralized by the pledging of tax increment revenue. The amount and term of the remainder of these commitments are indicated in the debt service to maturity tables presented in the accompanying notes.

The purpose for which the proceeds of the related debt issuances were utilized are disclosed in the debt descriptions in the accompanying notes. 60 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(5) Long-term Liabilities (Continued
As a result of the state’s action to dissolve all redevelopment agencies in the State of California, the Successor Agency to the dissolved Avalon Community Improvement Agency no longer receives the full amount of tax increment previously pledged by the dissolved redevelopment agency to its bondholders. In its place is a new revenue stream, Redevelopment Property Tax Trust Fund distributions (RPTTF), provided to theSuccessor Agency that represents only that portion of tax increment that is necessary to pay for the approved enforceable obligations that come due for that fiscal year.

For the year ended June 30, 2022, annual pledged revenues of $2,251,114 covered debt service requirements.
(e) Advances from the County of Los Angeles
The former ACIA and the County of Los Angeles entered into an agreement dated December 13, 1983 whereby the County agreed to defer its share of tax increment (County Deferrals) generated within the project area and remit it to the Agency to meet the Agency’s debt service obligations. Per the agreement the County Deferrals accruedsimple interest of S% for the year following the origination of the deferral amount. Afterthat, no further interest accrues. The County Deferrals were payable from property tax increment revenues received by the Agency in excess of its debt service requirements.

After the dissolution of redevelopment, the County has been making repayments of County Deferrals as Redevelopment Property Tax Trust Funds (RPTTF) are available; payments of $457,985 were made in the fiscal year ending June 30, 2022. There is no fixed payment schedule for the remaining $1,448,952 owed as it depends on variousfactors pursuant to the agreement. The accompanying financial statements do not reflect a liability to the City for this matter.
61 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(5) Long-term Liabilities (Continued)
Governmental Activities
Lease Liability
During the year ending June 30, 2017 the City of Avalon entered into a lease agreement for financing the acquisition of equipment and artificial turf valued at $831,782. The equipment and turf have a ten-year estimated useful life. This lease agreement qualifiesas a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the inception date.

The future minimum lease obligations and the value of these minimum lease payments as of June 30, 2022 were as follows:

Year Ending June 30,
2023 $ 137,0102024 96,520
Total minimum lease payments 233,530
Less: antunt representing interest (9,j94)
Value of minimum ease payments 224,336
(6) Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (fire) and Miscellaneous (all other) Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by the California PublicEmployees’ Retirement System (CaIPERS). Benefit provisions under the Plans are establishedby State statute and City resolution. CaIPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions, and membership information that can be found on the CaIPERS website. 62 (6) Pension Plan (Continued’)

CITY OF AVALON
Notes to the Financial Statements
(Continued)
Benefits Provided
CaIPERS provides service retirement and disability benefits, annual cost of living adjustmentsand death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full-time employment.

The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:

Hire date
Benefit formulaBenefit vesting schedule
Benefit payments
Retirement age
Required employee contribution rates
Required employer contribution rates
Hire date
Benefit formula
On or after
January 1, 2013

2.7% © 57
Benefit vesting schedule
Benefit paymentsRetirement ageRequired employee contribution rates Required employer contribution rates
5 years of 5 years of
Employees Covered
As of the June 30, 2021 measurement date, the following current andcovered by the benefit terms under the Plans:
former employees were
Miscellaneous Safety
48 22
Inactive employees or beneficiaries currently receiving benefits 77 Total
Miscellaneous
Prior to
January 1, On or after
2013 January 1, 2013

2.0% © 55 2°/s © 62
5 years of 5 years of
service service
monthly for life monthly for life
59 59

6.91°/s 6.75%

10.34°/s 7.59°/o
Safety
Prior to
January 1,
2013
2% © 50
service
monthly for life
service
monthly for life
54 54

13.00%

13.13 %

8.95 %

18. 19 %
Active employees
24 63

CITY OF AVALON
Notes to the Financial Statements
(Continued)
(6) Pension Plan (Continued
Contribution Description
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that theemployer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CaIPERS’ annual actuarial valuation process.

The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance anyunfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the City to satisfy contribution requirements that are identified by the pension plan terms as plan membercontribution requirements are classified as plan member contributions.

Actuarial Methods and Assumptions used to determine Total Pension Liability For the measurement period ending June 30, 2021 (the measurement date), the total pensionliability was determined using the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68
Actuarial Assumptions
Discount Rate 7.15°/aInflation 2.5O°/
Salary Increases Varies by Entry Age and Service
Mortality Rate Table* Derived using CaIPERS’ Membership Data for all funds
The lessor of contract COLA or 2.5%
Post Retirement Benefit until Purchasing Power Protection Increase Allowance Floor on Purchasing Power
applies, 2.50% thereafter
*
-The mortality table was used was developed based on CaIPERS’ specific data.

The probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90°/s of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CaIPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CaIPERS website.
64 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(6) Pension Plan (Continued
Discount Rate
The discount rate used to measure the total pension liability was 7.l5%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at the statutorily required rates, actuarially determined. Based onthose assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long term expected rate of return on plan on investment was applied to all periods of projected benefit payments to determine the total pension liability.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net ofpension plan investment expense and inflation) are developed for each major asset class.In determining the long-term expected rate of return, CaIPERS took into account both shortterm and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, except compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years)using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund.

The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using bothshort-term and long-term returns. The expected rate of return was then set equal to thesingle equivalent rate calculated above and adjusted to account for assumed administrativeexpenses.

The expected real rate of return by asset class:

Assumed Asset Real Return Real Return
Asset Class’ Allocation Years 1 — 102 Years ii+3
Global Equity 50.0% 4.80%Global Fixed Income 28.0 1.00 2.62 Inflation Sensitive 0.0 0.77 1.81Private Equity 8.0 6.30 7.23Real Estate 13.0 3.75 4.93Liquidity 1.0 0.00 (0.92) 11n the System’s ACER, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments, Inflation Assets are included in both GlobalEquity Securities and Global Debt Securities. 2An expected inflation of 2.O% used for this period3An expected inflation of 2.92% used for this period 65 CITY OF AVALON
(6) Pension Plan (Continuedi
Notes to the Financial Statements
(Continued)
Allocation of Net Pension Liability and Pension Expense to Individual Employers The following table shows the plan’s proportionate share measurement period:

Miscellaneous Plan:

Balance at: 6/30/20 (VD)Balance at: 6/30/21 (MD)
Net Changes during 20-21
Safety Plan:

Balance at: 6/30/20 (VD)Balance at: 6/30/21 (MD)
Net Changes during 20-21
Total:

Balance at: 6/30/20 (VD)Balance at: 6/30/21 (MD)
Net Changes during 20-21
of the net pension liability over the
Liability Net Position
(a) (b)
$ 19,209,920
18,928,432
(281,488)
23,491,32525,112,135
1,620,810
42,701,24544,040,567
$ 1,339,322
The City’s proportionate share of
and 2021 was as follows:

Proportion -June 30, 2020Proportion -June 30, 2021
Liability
(c) = (a) - (b)
14,484,766 4,725,15416,130,945 2,797,487
1,646,179 (1,927,667)
23,491,325
21,515,877 3,596,25821,515,877 (19,895,067)
14,484,766 28,216,479
37,646,822 6,393,74523,162,056 (21,822,734)
the net pension liability for each plan as of June 30, 2020 Change - Increase (Decrease)
Miscellaneous

0.112%0.147 %
Safety

0.097 0/0. 102 %

0.035% 0.005%
66 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(6) Pension Plan (Continued
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 7.15 percent, as well as what the net pension liabilitywould be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate:

Discount Rate Current Discount Discount Rate
- l% (6. lS°/o) Rate (7. lS°/o) +l0/c (8. 15%)
Miscellaneous Plan’s Net
Pension Liability $ 5,296,624 2,797,487 731,485
Safety Plan’s Net Pension
Liability 6,976,567 3,596,258 819,750
Total $ 12,273,191 6,393,745 1,551,235
Recognition of Gains and LossesUnder GASB 68, gains and losses related to changes in total pension liability and fiduciary netposition are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Difference between projected and
actual earnings 5 year straight-line amortization
All other amounts Straight-line amortization over the
average expected remaining service
lifetime (FARSL) of all members that areprovided with benefits (active, inactive, and retired) as of the beginning of the
measurement period.

Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related toPensionsFor the year ended June 30, 2022, the City recognized pension expense of $814,087 for theMiscellaneous Plan and pension income of $200,446 for the Safety Plan. As of June 30, 2022, the City reported other amounts for the Plan as deferred outflow and deferred inflow of resources related to pensions as follows:
67 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(6) Pension Plan (Continued
Deferred Deferred
Outflows Inflows
of Resources of Resources
Miscellaneous Plan:

Pension Contributions $ 222,186 -Difference between expected and actual experience 313,708 -Change in proportion and differences between employer contributions andproportionate share of contributions - (568,102) Actual Earnings on Pension Plan
Investments - (2,442,058)
Proportions 12,678 (19,291)
Total Miscellaneous Plan 548,572 (3,029,451)
Safety Plan:

Pension Contributions 304,358 -Difference between expected and actual experience 614,417 -Change in proportion and differences between employer contributions andproportionate share of contribution - (935,668) Actual Earnings on Pension Plan
Investments - (2,140,464)
Proportions 50,729 (15,060)
Total Safety Plan 969,504 (3,091,192)
Total:

Pension Contributions 526,544 -Difference between expected and actual r experience 928,125 -Change in proportion and differences between employer contributions andproportionate share of contribution - (1,503,770) Actual Earnings on Pension Plan
Investments - (4,582,522)
Proportions 63,407 (34,351)
Total City $ 1,518,076 (6,120,643)
68 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(6) Pension Plan (Continued’)
Employer contributions subsequent to the measurement date reported as deferred outflows of resources in the amount of $526,544 will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2023.

Other amounts reported as deferred outflows and deferred inflows of resources in the previouschart, including the employer-specific item, will be recognized in future pension expense as follows:

Fiscal Deferred
Year Outflows/(J.nflows)
Ending June 30, of Resources
Miscellaneous Plan:
2023 $ (731,091)2024 (671,878)2025 (625,237)2026 (674,859)2027 - Safety Plan:
2023 (659,171)
2024 (606,762)
2025 (571,087)
2026 (589,026)2027 -
Total:
2023 (1,390,262)2024 (1,278,640)2025 (1,196,324)2026 (1,263,885)2027 - 69 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(6) Pension Plan (Continued
Subsequent EventsOn July 12, 2021, CaIPERS reported a preliminary 21.3% net return on investments for fiscalyear 2020-21. Based on the thresholds specified in CaIPERS Funding Risk Mitigation policy,the excess return of l4.3% prescribes a reduction in investment volatility that correspondsto a reduction in the discount rate used for funding purposes of 0.20%, from 7.OO% to 6.80%.Since CaIPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle,the board elected to defer any changes to the asset allocation until the ULM processconcluded, and the board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board adopted a new strategic asset allocation. The new assetallocation along with the new capital market assumptions, economic assumptions andadministrative expense assumption support a discount rate of 6.90% (net of investmentexpense but without a reduction for administrative expense) for financial reporting purposes.

This includes a reduction in the price inflation assumption from 2.S0% to 2.3O% as recommended in the November 2021 CaIPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. Thesenew assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.
(7) Other Post-Employment Benefits (OPEB)
Plan Descriøtion
The City provides medical and dental benefits for retired employees and their spouses through a single employer plan. The City contributes to the CaIPERS Health Plan single-employerdefined benefit healthcare plan. The benefits are available to employees who retire from theCity and commence pension benefits under CaIPERS (on or after age 50) with at least 5 yearsof service.

Employees retiring with at least 20 years of service receive a City contribution for the full cost of coverage for medical and dental coverage. As of the June 30, 2021 measurement date, 34 retired employees were eligible to receive medical and dental benefits. The Plan does notissue a publicly available financial report. 70 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(7) Other Post-Employment Benefits (OPEB’) (Continued’) Employees Covered
As of the June 30, 2021 measurement date, the following current and former employeeswere covered by the benefit terms under the Plan:

Active employees 54
Inactive employees or beneficiaries currently receiving benefits 34 Total 88
Contributions
The City pays the cost of the post-employment healthcare and dental benefits for retirees and their spouses during the life of the retiree. The surviving spouse of an eligible retiree whoelected spouse coverage under CaIPERS is eligible for the contribution upon the death of the retiree. Substantially all of the government’s employees may become eligible for these benefits if they reach normal retirement age while working for the City.

The contribution requirements of plan members and the City are established and may be amended by the City, City Council, and/or the employee associations. Currently, contributionsare not required from plan members. The City has established a trust for the purpose of holding funds that have been irrevocably contributed by the City toward funding of its OPEB obligation. This trust is being administered by California Employer’s Retiree Benefit Trust (CERBT). Annually, City Council determines the amount that the City will fund to this trust.

For the fiscal year ended June 30, 2022, the City’s cash contributions were $0 in payments to the trust. In addition, the City contributed $286,384 of its funds in the form of retiree payments and implied subsidy paid by the District for retirees for total payments of $286,384.

The City’s total OPES liability was measured as of June 30, 2021 by an actuarial valuation based on the following actuarial methods and assumptions:

Discount Rate: 2.OO% per annum. This discount rate is the average, rounded to S basispoints, of the range of 3-20 year municipal bond rate indices: Fidelity 20-year Municipal GD AA index.

Inflation Rate: 2.50% per year
Aggregate Payroll Increases: 2.8O% per year. This assumption is used to amortize the unfunded actuarial accrued liability and to determine the Entry Age Normal actuarialliabilities.Mortality Rate: Based on assumptions for Public Agency Miscellaneous, Police and Fire members published in the November 2021 CaIPERS Experience Study. 71 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(7) Other Post-Employment Benefits (OPEBI (Continued
Turnover Rate: Assumption used to project terminations (voluntary and involuntary) priorto meeting minimum retirement eligibility for retiree health coverage. The rates represent the probability of termination in the next 12 months. Based on CaIPERS Experience Studyand Review of Actuarial Assumptions published in November 2021 for Public Agency Miscellaneous, Police, and Fire members.Retirement Rate: Based on CaIPERS Experience Study and Review of Actuarial Assumptions published in November 2021 for Public Agency Miscellaneous, Police and Fire members.

Discount Rate
The long-term expected rate of return on OPEB plan investments was 6.50%, which was CERBT’s mean estimate of’ long-term investment returns on its OPEB portfolio. These rangesare combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class includedin the OPEB plan’s target allocation as of June 30, 2021 are summarized in the following table.

The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Long-Term
expected
Target real rate of
Asset Class Allocation return
Equity 59.00% 4.42%Fixed income 25.00% 1.00%
TIPS 5.OO°/o O.lS%
Commodities 3.00% 1.73%
REITs 8.00% 3.98%
Total lOO°/o
72 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(7) Other Post-Employment Benefits (OPEB) (Continued)
Changes in the Total OPEB Liability
The changes in the Plan’s total OPEB liability is as follows:

Balance at June 30, 2021
Service cost
Interest
Differences between expected and actual
experience
Changes of assumptionsContributions - employer
Net investment incomeBenefit payments
Administrative expense
Net ChangesBalance at June 30, 2022
(Measurement Date June 30, 2021)
Net OPEB
Liabilitv/(Asset)
S 10,121,078 259.543 9,861,535
505,925 - 505,925261,685 - 261,685
(938,058) - (938,058)
423,645 - 423,645
- 236,555 (236,555)- 71,328 (71,328)
(236,555) (236,555) -
- (98) 98
16,642 71,230 (54,588)
5 10,137,720 330,773 9,806.947
Sensitivity of the OPEB Liability to Changes in the Discount Rate The following presents the City’s OPEB liability if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:

Current
OPEB Liability
i% Decrease
(1.000/0)
$ 11,736,571
Discount Rate
(2.00%)
9,806,947
l% Increase
(3.00 0/s)
8,295,061
i% Decrease
(14.75 % non -
Medica re/4 .25 %M edica re
decreasing to
an ultimate rate of

3.04%)
$ 8,265,984
Current Healthcare Cost
Trend Rates
(15.75% non -
Medicare/S. 25%M edica re)
decreasing to
an ultimate rate of

4.04°/a)
9,806,947
1% Increase
(16.75% nonMed ica re/6 .25%M ed ica re
decreasing to
an ultimate rate of

5.04%)
11,832,243
Total OPEB
Liability
Plan Fiduciary
Net Position
Sensitivity of the OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:

OPEB Liability
73 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(7) Other Post-Employment Benefits (OPEB) (Continued)
Recocjnition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability are recognized in OPEB expensesystematically over time.

Amounts are first recognized
remaining amounts are categrelated to DPEB and are to be period for deferred inflows and
in OPEB expense for the year the gain or loss occurs. The orized as deferred outflows and deferred inflows of resources recognized in future OPEB expense. The initial amortization deferred outflows is three years.

OPEB Exoense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $748,755. At June 30, 2022, the City reported deferred outflows and inflows of resources related to OPEBfrom the following sources:

OPEB contributions subsequent to measurement dateChanges in assumptions Differences between expected and actual experienceNet difference between projected and actual earnings on investments
Total
The $286,384 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2021 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2023. Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

Fiscal Year
Ended June 30:
20232024
202520262027
Thereafter
Deferred
Outflows! (Inflows)
of Resources
$ (2,086)
(2,084)
83,224
116,340
82,345
(51,367)
Deferred
Outflows Deferred Inflows
of_Resources of Resources
$ 286,384 -
1,408,918 (283,900)
- (859,272)
- (39,374)
$ 1,695,302 (1,182,546)
74 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(8) Risk Management and Self-Insurance
The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, error and omissions, injuries to employees and natural disaster. The City retains the risk of loss for general liability, property damage and automobile related claims of up to $25,000 per occurrence. All risk management activities are accounted for in an internal service fund.Changes in the aggregate estimated claims payable resulted from the following:

Liability as of June 30, 2020
Claims incurred and changes in estimatesClaims payments Liability as of June 30, 2021
Claims incurred and changes in estimatesClaims payments Liability as of June 30, 2022
The City is a member of the California Intergovernmental Risk Authority (CIRCA). The CIRA is a joint powers authority, which provides joint protection wherein cities pool their losses and claims, jointly purchase excess insurance, and share administrative and related costs. Under the pooling arrangement, the City is to contribute a premium based upon its assessed riskfactor for general liability and yearly payroll expenses for workers’ compensation and employer’s liability.

The annual deposits made with the CIRA include estimates of amounts to be paid for reported claims and incurred but not yet reported claims based upon past experience and modified forcurrent trends and information. Such claims are paid by the CIRA and, in effect charged back to the City via future insurance deposits, no accruals have been made for outstanding claims.

Settlement claims have not exceeded any of the coverage amounts in any of the last three fiscal years, and there were no reductions in the City’s insurance coverage during the yearended June 30, 2022.

The City carries commercial insurance on all significant property and equipment owned by the City, as well as fidelity bonds for all applicable public officials and employees.

Enterrjrise Funds
54,969
453,647
Claims Liability
Governmental Funds
$ 120,796
222,776
(201,364)
142,208
263,535
(307,448)
$ 98,295
(476,686)
31,930
205,431
(211,376)
25,985
75 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(9) Individual Fund Disclosures
The following funds reported a deficit fund balance:

Major Funds:

Solidwaste 887,217 (b)Avalon Transit 15,101 (c)
Nonmajor Special Revenue Funds:

Community Development Block Grant 4,121 (a)
(a) The Local Transportation Fund and Community Development and Block Grant Fund deficits are expected to be eliminated through future grant receipts. (b) The City expects to eliminate the Solidwaste Fund deficit through increased user fees. (c) The City expects to eliminate the Avalon Transit fund deficit through General Fund transfers.
(10) Commitments and Contingencies
(a) Lawsuits
Avalon K-12 School/California Department of Toxic Substance Control Matter In March 2012, the California Environmental Protection Agency’s Department of ToxicSubstances Control (DTSC) issued an Imminent and Substantial Endangerment Determination and Remedial Action Order (Order) to the City, the Santa Catalina Island Company, and the Long Beach Unified School District regarding three parcels of property totaling approximately 14 acres, which include the Avalon K-12 School and the adjacent City warehouse property. The Order states that there may be an imminent and/orsubstantial endangerment to the public health or welfare or to the environment becauseof a release and/or the threatened release of hazardous substances at the site andrequires the named parties to undertake certain response actions to address thecontamination. Each of the parties is jointly and severally liable to DTSC for the requiredresponse actions.Since issuance of the Order, the City and the other two parties have entered into acooperating agreement, whereby they have jointly retained a consultant and are sharing the cost to prepare and implement the Remedial Investigation/Feasibility Study (RI/Fr).

The Remedial Investigation, namely the soil sampling and excavation activities on-site was performed in September 2013, the report on which was approved by the DTSC on February 12, 2014. Feedback from the DTSC called for a Human Health Risk Assessment(HHRA), preparation of a Feasibility Study workplan, and further investigations.Following completion and approval of the Feasibility Study, the parties will confer with 76 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(10) Commitments and Contingencies (Continuedi
the DTSC on the appropriate actions to address any contamination identified in the investigation, which will be implemented in the Remedial Action Plan. The nature and costs of any required remedial actions cannot be estimated at this time. Once the costsare known, the parties will attempt to negotiate a cost sharing agreement for thatportion of work, to avoid litigation. The City has tendered the defense and indemnity of this matter to insurance carriers that issued insurance to the City in the past. One ofthe carriers has accepted tender, with reservation of rights, and, as such, a significant portion of the costs have been covered by insurance.EPA/State/Regional Water Board Investigations The United States Environmental Protection Agency, the State Water Resources Control Board and the Los Angeles Regional Water Quality Control Board have conducted a review of the City’s sanitary sewer system operations.

The City owns a sewage treatment plant and related conveyance system, and the City has a contract with Environ Strategies to operate and maintain the system. Theprobability of such litigation or amount or monetary exposure is unknown at this time.

A Cease and Desist Order was issued March 5, 2012 by the Los Angeles Regional Water Quality Board that requires the City to initiate many programs and updates to its sewersystem. No fines were proposed and the City does not anticipate any fines being levied.

In October 2014 and 2015, the City filed reports verifying its compliance with permitrequirements. As of June 30, 2019, the City has estimated potential costs of remediation to be $25,000, in addition to the routine maintenance or improvement costs typically incurred by the City each fiscal year. This amount is included as a liability in the SewerEnterprise Fund.

There are various other claims and legal actions pending against the City. In the opinion of the City Attorney and City management, other than the claims noted above, liabilitiesarising from these claims and legal actions, if any, will not have an adverse materialeffect on the financial position of the City. (b) Federal and State Grants
The City has received State and Federal funds for specific purposes that are subject to review by the grantor agencies. Although, such audits could generate expenditure disallowances under the terms of the grants, it is believed that required reimbursements, if any, will not be material.
(11) Landfill Closure Liability
State and federal laws and regulations require the City to pay for costs related of the Pebbly Beach Landfill (PBL) to protect against contaminants leaking from the PBL into the local groundwater and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the City reports a portion of these 77 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(11) Landfill Closure Liability (Continued)
closure and postclosure care costs as an operating expense in each period based on landfillcapacity used as of each balance sheet date. The $5.2 million reported as landfill closure and postclosure care liability as of June 30, 2022, represents the cumulative amount reportedbased on the use of 90 percent of the estimated capacity of the landfill. The City will recognize the remaining estimated cost of closure and postclosure care of $643 thousand as the remaining capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in 2016. The City expects to close the landfill in the year 2025.

Actual cost may be higher due to inflation, changes in technology, or changes in regulations The City is required by state and Federal laws and regulations to make annual contributions to a trust to finance closure and postclosure care. The City is in compliance with these requirements, and, at June 30, 2022 investments of $2.6 million ($2.6 million fair value) areheld for these purposes. These are reported as cash and investments on the Statement ofNet Position. The City expects that future inflation costs will be paid from interest earnings on these annual contributions. However, if interest earnings are inadequate or additionalpostclosure care requirements are determined (due to changes in technology or applicablelaws or regulations, for example), these costs may need to be covered by charges to futurelandfill users or from future tax revenue. (12) Operating Agreement
On September 16, 2003, the City entered into an operating agreement with the Avalon Medical Development Corporation (AMDC) whereby AMDC will rent the Avalon MunicipalHospital facility and perform all maintenance and operation of the facility. The agreement term calls for automatic extensions through September 15, 2033 with annual rental paymentsof $1 due from AMDC. (13) Lease Receivables
Land
The City has entered into 28 land leases with lease terms ranging from one year to 55.375 years. The lessees are required to make monthly fixed payments ranging from $36 to $4,179with discount rates ranging from O.O% to 2.623°Jo. As of June 30, 2022, the lease receivable is $1,602,106, and deferred inflows of resources is $1,597,988. The City recognized $363,555 of lease revenue during the fiscal year.

Buildings
The City has entered into five building leases with lease terms ranging from 2.25 years to 5.5 years. The lessees are required to make monthly fixed payments ranging from $3,327 to $3,400, or an annual fixed payment of $10,000, or variable payments, with discount rates ranging from O.O% to 2.536%. As of June 30, 2022, the lease receivable is $857,035, and deferred inflows of resources is $845,847. The City recognized $97,907 of lease revenueduring the fiscal year. 78 CITY OF AVALON
Notes to the Financial Statements
(Continued)
(13) Lease Receivables (Continued)
Infrastructure
The City has entered into one infrastructure lease with a lease term of nine years. The City will waive rent for the Lessee’s first seven years of operation. Beginning May 1, 2028, the Lessee shall pay an annual lease mooring fee for the End-Float based on the float’s totallength, in accordance with the City’s current mooring fee size schedule. As of June 30, 2022, the lease receivable is $39,960, and deferred inflows of resources is $35,520. The City recognized no lease revenue during the fiscal year.
79 (This page intentionally left blank)

REQUIRED SUPPLEMENTARY INFORMATION

CITY OF AVALON
Schedule of the Plan’s Proportionate Share of the Net Pension Liability Year ended June 30, 2022
(With comparative information for the last 10 years)*
Miscellaneous Plan
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017Plan’s Proportion of the Net Pension Liability (Asset) 0.052°k O.1190/a 0.113% 0.112% Plan’s Proportionate Share of the Net Pension Liability (Asset) $3,244,942 3,251,550 3,925,210 4,427,923Plan’s Covered-Employee Payroll $2,244,540 2,163,234 2,493,789 2,773,397Plan’s Proportionate Share of the Net Pension Liability (Asset) as a percentage of its Covered Payroll 144.57% 1S0.31°/o 157.40°k 159.66% Plan’s Proportion of the Fiduciary Net Position as aPercentage of the Plan’s Toral Pension Liability 75.76% 76.83°/o 72.82% J2.SSJo Notes to Schedule:

Summary of Changes of Benef ts or Assur,s:ions:
8eefit Changes: The’e were no changes to benefit terms that applied to all members of the Public Agency Pool.However, indvidual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Addtional Service Credit to members retiring during a spec;fied time perioc (a,k.a Goloen Handshakes).

Employers that have done so may need to report this informat-on as a separate liablity in their financial statements as CaIPERS considers such amoi,,nts to be separate financed employer-specific liabilities. Additionally, tne figures above donot include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2020valuaton date, unless the liab lity impact is deemed to be material to the Pubkc Agency pool.Changes in Assumptions: Tnere were none in 2019, 2020 and 2021. In 2018, demographic assumptionsand nflat:on rate were changed in accw’dance to CaIPERS Experience Study and Review of Actuarial Assumptions December 2011. In 2017, the accourtng dscount rate was reduced from 7.65 percent to fl’he fiscal year ended June 30, 2015 was fhe first year of implementation. Information for the fast 10 years’s not available
80 Miscellaneous Plan
6/30/2018 6/30/2019 6/30/2020 6/30/2021
O.115°/a 0.111% 0.112% 0.147°/o
4,200,936 4,457,609 2,797,487 2,797,4873,007,600 3,248,877 3,085,070 2,225,428 139.68°/o 137.20% 9O&30/o 125.71%

76.19% 75.260/o 75.lO0k 8829%
81 CITY OF AVALON
Schedule of Plan Contributions
Year ended June 30, 2022
(With comparative information for the last 10 years)*
Miscellaneous
Fiscal Year 6/3012015 6/30/2016 6/30/2017 6/30/2018
Actuarially Determined Contribution $ 380971 171,940 467,748 308,960Contributions in relation to the Actuarially Determined Contribution (380,971) (171,940) (467748) (308960) Contribution Deficiency (Excess) $ - -Covered-Employee Payroll $ 2,163,234 2,493,789 2,773,397 3,007,600Contributions as a Percentage of CoveredEmployee Payroll 17.61°/a 6.89°/a 16.87°/a 10,27% Notes to Schedule:

The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2022 were from the ]une 30, 2019 funding valuation report.Actuarial Cost Method Entry Age NormalAmortization Method/Period Level percent of payrollAsset Valuation Method Market ValueInflation 2.5°/aSalary Increases Varies by Entry Age and Service Payroll Growth 2.75%
Investment Rate of Return 7.OO°/o Net of Pension Plan Investment and Administrative Expenses; includes inflation
Retirement Age The probabilities of Retirement are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015.

Mortality Derived using CaIPERS’ Membership Data for all funds. *The fiscal year ended June 30, 2015 was the first year of implementation.

Information for the last 10 years is not available.

The CaIPERS Board of Administration has adopted an new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and noninvestment gains/losses. The new policy removesthe 5-year ramp-down on investment gains/losses. These changes will apply onlyto new UAL bases established on or after June 30, 2019. 82 Miscellaneous
6/30/201g 6/30/2020 6/30/2021 6/30/2022
372,356 265096 337,003 389,044
(372,356) (265,096J (337,003) (389,044)
3,248,877 3,085,070 2,225,428 2,541,087

11.46°/o 8.59% 15.14% 15.31%
83 CITY OF AVALON
Schedule of the Plans Proportionate Share of the Net Pension Liability Year ended June 30, 2022
(With comparative information for the last 10 years)*
Safety Plan
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017Plan’s Proportion of the Net Pension Liability (Asset) 0.069% 0.131°/n 0.102% 0.099% Plans Proportionate Share of the Net Pension Liability (Asset) $ 4,315,290 4,453,312 5,295,648 5,914,603Plans Covered-Employee Payroll $ 2,013,283 2,060,685 2,049,532 2,188,257Plan’s Proportionate Share of the Net Pension Liability (Asset) as a percentage of its Covered Payroll 21434% 216.11°/n 258.38% 27029°/a Plan’s Proportion of the Fiduciary Net Position as a Percentage of the Plan’s Total Pension Liability 73.73% 73.61°/n 69.60% 70.76% Notes to Schedule:

Benefit changes: There were no changes to benefit terms that applied to all members of the Public AgencyPool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshake). Employers that have done so may need to report this information as a separate liability in their financial statement as CaIPERS considers such amounts to be separately financedemployer-specific liabilities. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2020 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

Changes in assumptions: There were none in 2019, 2020 or 2021. In 2018, demographic assumptions and inflation rate were changed in accordance to the CaIPERS Experience Study and Review of Actuarial Assumptions December 2017. In 2017 the discount rate was changed from 7.65 percent to 7.15 percent The fiscal year ended June 30, 2015 was the first year of implementation, Information for the last 10 years is not available.
84 Safety Plan
6/30/2018 6/30/2019 6/30/2020 6/30/2021

0.098°/u 0.097°/u 0.097°/u 0.102°/u
5,774,582 6,061,774 6,465,638 3,596,2582,113,600 2,351,828 2,321,155 1,860,947 273.21% 257.75% 278.55°/u 193.25%73.780% 73.371% 73.117°/u 86.610% 85 CITY OF AVALON
Schedule of Plan Contributions
Year ended June 30, 2022
(With comparative information for the last 10 years)*
Safety
Fiscal Year 6/30/2015 6/30/2016 6/30/2017 6/30/2018
Actuarially Determined Contribution $ 542,007 284,406 710,437 565,204 Contributions in relation to the
Actuarially Determined Contribution (542,007) (284,406) (710,437) (565,204) Contribution Deficiency (Excess)Covered-Employee Payroll $ 2060,685 2,049,532 2,188,257 2,113,600Contributions as a Percentage ofCovered-Employee Payroll 26.30°/o 13.88°/o 32.47°/n 26.74%Notes to Schedule:

The actuarial methods and assumptions used to set the actuarially determined contributions forfiscal year 2022 were from the June 30, 2019 funding valuation report.

Actuarial Cost Method Entry Age NormalAmortization Method/Period Level percent of payrollAsset Valuation Method Market Value Inflation 2.5°/oSalary Increases Varies by Entry Age and Service Payroll Growth ?.?5°/n
Investment Rate of Return 7.00% Net of Pension Plan Investment and Administrative Expenses; includes inflation
Retirement Age The probabilities of Retirement are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015.

Mortality Derived using CaIPERS Membership Data for all funds. *The fiscal year ended June 30, 2015 was the first year of implementation. In formation for the last 10 years is not available.

The CaIPERS Board of Administration has adopted an new
amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with thepayments computed using a level dollar amount. In addition, the newpolicy removes the 5-year ramp-up and ramp-down on UAL basesattributable to assumption changes and noninvestment gains/losses. 86 CITY OF AVALON
Schedule of Changes in Total OPEB Liability and Related Ratios Year ended June 30, 2022
(With comparative information for the last 10 years)t
Measurement date June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 Total OPEB liability
Service cost $ 362,098 321,604 333,322 410,991 505,925Interest on the total OPEB liability 234,548 270,662 287,947 283,126 261,685 Actual and expected experience difference - - (75,252) (16029) (938,058) Changes in assumptions (811,400) (73,428) 473,354 1,070,485 423,645 Benefit payments (158,558) (190,119) (168,056) (183,857) (236,555) Net change in total OPEB liability (373,312) 328,719 851,315 1,564,716 16,642 Total OPEB liability - beginning 7,149,640 7,376,328 7,705,047 8,556,362 10,121,078Total DPEB liability - ending $ 7,376,328 7,705,047 8,556,362 10,121,078 10,137,720 Plan Fiduciary Net Position
Contribution - employer $ - - 418,056 183,857 236,555Net investment income - - 807 8,859 71,328Benefit payments - - (168,056) (183,857) (236,555) Administrative expense - - - (123) (98)
Net change in plan fiduc.ary net position - - 250,807 8,736 71,230Pla’ ficuciary net postion - beginning - - - 250,807 259543 Plan flauciary net pos;tion - ending (b) $ - - 250,807 259,543 330,773Net OPEB liab l,ty - ending (a)-(b) $ 7,376,328 7,705,047 8,305,555 9,861,535 9,806,947 Plan fidLcary net position as a percentage of
the total OPEB I abilty 0.00% 0.00% 2.93% 2.56% 326%
Covered employee payroll $ 5,154,285 $ 5,600,705 5 5,406,225 $ 4,446,081 $ 4,086,375OPEB liability as a percentage of coverecJemployee payroll 143.11% 137.57% 153.63% 221.80% 239.99% Notes to Schedule:

Changes in assumptions. The discount rate as of the June 30, 2016 measurement date was 2.92°/a. The discount rate as of the June 30, 2017 measurement date was 3.Sô°/a, based on 20-year municipal bond rates as of each measurement Gate. The discount rate for the measurement period ended June 30, 2018 was 3.62%. The discount rate as of the June 30, 2020 measurement date was 2.49%. The discount rateas of the June 30, 2021 measurement sate was 2.00%.

Payroll growth, mortality, termination, disability, and retirement rates have been updated from CaIPERS Experience Study and Rev,ew of Actuarial Assumptions publisheo in December 2017 to the most recent study published in November 2021. These changes caused a slight net increase in the liaoil’ty.

Health care trend rates changes are as noted below. The ret impact of all of these changes is an increase in the liab lity. a. Medical/prescription drug trend rates have been updated from (i) an initial rate of 6.20% (ron-Medicare) / 5.10% (Medicare) that decreases gradually to an ult mate rate of 4.000/o to (ii) Getzen 2021 table that reflects actualpremium increases from 2021 to 2022 followec oy 5.75% (non-Medicare) / 5.40% (Medicare) that decreases gradually to an ultimate rate of 4.04% in 2075.
b. PEMHCA rnini.”lum trend has been increased from 3.75% to 4.20’/a from. 2021 to 2022 followea by 3.75% for all subsequent years.
c. Medicare Part B trend rates have been updated from (i) 5.00% through 2055 and 4.00% thereafter to the (ii) projected premium increases shown in the 2021 Medicare Trustees report with an initial rate of 6.73% that decreases gradually to an ultimate rate of 4.O4Wa in 2075.

Historical information is required only for measurement periods for which GASB 75 is applicable.Future years! information will be displayed up to 10 years as information becomes available. *
- Fiscal year 2017 was the first year of implementation, therefore only five years are shown. 88 CITY OF AVALON
Schedule of OPEB Contributions
Year ended june 30, 2022
LAST TEN FISCAL YEARS*
2018 2019 2020 2021 2022
S
- $ - $ 208,650 $ 237,527 $ 428,380
-
- (208650) (428380)
S - S
- -
-
S 5,154,285 S 5,600,705 $ 5,406,225 $4,446,081 $4,086,375 Actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022were from the June 30, 2019 actuarial valuation.

Methods and assumptions used to determine contributions:

Actuarial Cost Method Entry Age Normal
Asset Valuation Method Market value
Inflation 2.SO°/a
Salary IncreasesInvestment Rate of Return
Healthcare cost-trend rates
Fiscal Year Ended June 3D
Actuarially Determined Contribution (ADC)Contributions in relation to the ADC Contribution deficiency (excess)
Covered employee payrollContributions as a percentage of covered-employee payroll
Notes to Schedule

0.00% 0.00% 534% 10.48%

2.75% per annum, in aggregate

6.50% per annum net of OPE8 plan investment

5.1% in 2019 and all later yearsDental and vision premiums are assumed to increase 4°/a per yearMedicare Part B premiums are assumed to increase 30/o after 2018 *Historical information is required only for measurement periods for which GASB 75 is applicable.

Future years’ information will be displayed up to 10 years as information becomes available. 89 CITY OF AVALON
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual Year ended June 30, 2022
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:

Taxes $ 8,716,551 12,275,556 13,648,211 1,372,655
Licenses, permits and fees 415,950 415,950 601,823 185,873Fines, forfeitures and penalties 5,000 5,000 11,017 6,017Investment income (loss) 20,000 20,000 (78,423) (98,423)Intergovernmental revenue 2,082,761 2,260,713 1,514,236 (746,477) Charges for services 415,800 415,800 582,481 166,681Other revenue 120,000 135,000 107,097 (27,903) Total revenues 11,776,062 15,528,019 16,386,442 858,423 Expenditures:

Current:

Public safety 1,863,632 1,863,632 1,817,413 46,219Fire and ambulance 2,803,273 2,805,273 2,687,161 118,112 Planning, building and engineering 1,238,839 1,238,839 849,889 388,950 Community services 803,541 803,541 723,883 79,658
Public works 1,014,571 1,029,571 1,022,359 7,212
General government:

Services and charges 1,498,828 2,240,009 2,203,199 36,810Contract services 646,570 836,570 820,239 16,331Special departmental 24,000 22,000 40,513 (18,513) Capital expenditures 1,385,659 1,585,659 111,331 1,474,328 Debt service:

Principal 120,000 120,000 126,860 (6,860)
Interest 17,010 17,010 10,150 6,860
Total expenditures 11,415,923 12,562,104 10,412,997 2,149,107 Excess of revenues over
(under) expenditures 360,139 2,965,915 5,973,445 3,007,530 Other financing sources (Uses):

Transfers in 50,000 50,000 13,818 (36,182)Transfers out (335,500) (335,500) (185,766) 149,734 Total other financing sources (uses) (285,500) (285,500) (171,948) 113,552 Net change in fund balance 74,639 2,680,415 5,801,497 3,121,082 Fund balance, beginning of year 6,787,313 6,787,313 6,787,313 6,787,313Fund balance, end of year $ 6,861,952 9,467,728 12,588,810 9,908,395 90 CITY OF AVALON
Local Transportation Fund - Special Revenue Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual Year ended June 30, 2022
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:

Intergovernmental revenue $ 1,424,943 1,424,943 2,184,653 759,710 Total revenues 1,424,943 1,424,943 2,184,653 759,710
Expenditures:

Current:

Transportation 1,418,943 1,418,943 1,845,595 (426,652)Total expenditures 1,418,943 1,418,943 1,845,595 (426,652) Excess of revenues over
(under) expenditures 6,000 6,000 339,058 333,058
OTHER FINANCING SOURCES (USES):

Transfers out (5,000) 5,000
Total other financing sources (uses) (5,000) 5,000
Net change in fund balance 6,000 6,000 334,058 338,058
Fund balance, beginning of year (334,058) (334,0) (334,058) -Fund balance, end of year $ (328,058) (328,Q) - 338,058 91 CITY OF AVALON
Avalon Housing Authority Fund -Special Revenue Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual Year ended June 30, 2022
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:

Investment income $ 25,000 25,000 21,479 (3,521)Other revenue - - 58,423 58,423 Total revenues 25,000 25,000 79,902 54,902
Expenditures:

Current:

Planning, building and engineering 11,231 11,231 11,221 10 Community Services 129,676 129,676 46,334 83,342General government:

Contract services 38,960 38,960 14,093 24,867
Capital Expenditures 302,571 302,571 63,748 238,823
Total expenditures 482,438 482,438 135,396 347,042
Excess of revenues over
(under) expenditures (457,438) (457,438) (55,494) 401,944 Net change in fund balance (457,438) (457,438) (55,494) 401,944 Fund balance, beginning of year 5,773,570 5,773,570 5,773,570 - Fund balance, end of year $ 5,316,132 5,316,132 5,718,076 401944 92 CITY OF AVALON
Notes to Required Supplementary Information
Year Ended June 30, 2021
(1) Pension Information
Change in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a.Golden Handshakes). Employers that have done so may need to report this information as a separate liability in their financial statement as CaIPERS considers such amounts to be separately financed employer-specific liabilities. Additionally, thefigures do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2020 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

Changes in Assumotions: None
(2) Budgetary Information
The City follows the procedures outlined below in establishing the budgetary data reflected in the basic financial statements:
• On or before June 30 of the fiscal year, the City is required to adopt an annual operating budget for the ensuing fiscal year for the General and Special Revenue Funds. A public hearing is held to afford taxpayers an opportunity to be heard on the proposed budget.
• The operating budgets are reported on the modified accrual basis of accounting and are adopted on a basis consistent with accounting principlesgenerally accepted in the United States of America. The operating budget includes proposed expenditures and appropriations. Expenditures may notlegally exceed appropriations at the fund level. Any unexpended budgeted appropriations lapse at year-end.
• Once the budget is approved, the City Council must authorize any transfer amounts between individual funds and any revisions that alter the totalappropriations of a fund. Management may amend the budget for intrafund line-item transfers.
93 (This page intentionally left blank)

OTHER INFORMATION
97 (This page intentionally left blank)

CITY OF AVALON
Nonmajor Governmental Fund
Special Revenue Funds
The following Special Revenue Funds have been classified as nonmajor governmental funds in the accompanying schedules:

Street — This fund receives and disburses the City’s share of the State Gasoline Taxes inaccordance with the provisions of the State of California Streets and Highway Code.

Traffic Control and Safety — This fund is used to record traffic fines resulting from violations of the California Vehicle Code. The lines are deposited in this fund and are restricted by law for expenditures on traffic signs, signals, and other traffic control devices and the maintenance or construction of streets, bridges, and culverts.

Community Develonment Block Grant — This fund receives and disburses Community Development Block Grant monies from the United States Department of Housing and UrbanDevelopment. These funds are used for the redevelopment or initial construction of City streets and designated housing projects.

Development Impact Fees — This fund is used to account for monies received from developers for charges designed to mitigate the impact of new developments on public services.

Mclean / Hall / Putnam Trust — This fund is used to account for contributions received whichhave been restricted in use to fund the purchase of fire equipment. 94 Assets:

Cash and investments
Receivables, net:

AccountsAccounts
Due from other governments
Total assets
Liabilities:

Accounts payableAccrued liabilities
Fund balances:

Restricted:

Capital projectsStreet projects
Total fund balances

CITY OF AVALON
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
Total liabilities, deferred inflows of
resources and fund balances
Special Revenue Funds
Traffic Control
Street and Safety
$ 144,124
164
5,124
Total liabilities
Deferred Inflows of Resources:

Unavailable revenue
20,809
$ 165,097
$ 5,845
5,845
159,252159,252
$ 165,097
Unassigned
5,124
3,387
1,469
4,856
268268
5,124
95 Special Revenue Funds
Community
Development
Block Grant
Development
Impact Fees
49,613
58 Mclean I Hall I
Putnam Trust
39,363
61 Total
233,100
5,124
283
20,809
49,671 39,424
40,992
(1,568)
39,424
39,424
259,316
13,353
1,469
14,822
90,663
159,252
(5,421)
244,494259,316
4,121
4,121
(4,121)
(4,121)
49,671
49,67149,671
96 CITY OF AVALON
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
Year ended June 30, 2022
Revenues:

Special Revenue Funds
Street
Traffic Control and
Safety
Taxes
Fines, forfeitures and penalties
Investment incomeIntergovernmental revenue
Other revenue
Total revenues
$ 173,994
526
174,520
91,455
91,455
Expenditures:

Current:

Community services
Public works
General government:

Contract services
Special departmental
Total expenditures
Excess of revenues over
(under) expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance (deficit), beginning of year
Fund balance (deficit), end of year
94,800
(8,818)(8,818)
85,982
73,270
$ 159,252
(43,941)
46,580
46,580
2,639
(2,371)
268
79,720 124,370
10,782
- 244
79,720 135,396
97 Special Revenue Funds
Community
Development Development Mclean / Hall
Block Grant Impact Fees I Putnam Trust Total
- -
- 173,994
- -
- 91,455
187 196 909
24,302 - - 24,302
- 12,078 3,065 15,143
24,302 12,265 3,261 305,80330,465 - - 30,465
- -
- 204,090
- -
- 10,782
-
- 4,829 5,073
30,465 - 4,829 250,410
(6,163) 12,265 (1,568) 55,393
25,862 - - 72,442
- -
- (8,818)
25,862 - - 63,624
19,699 12,265 (1,568) 119,017
(23,820) 37,406 40,992 125,477
(4,121) 49,671 39,424 244,494
98 CITY OF AVALON
Street Special Revenue Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget to Actual Year ended June 30, 2022
Variance with
Final Budget
Positive
Final Budget Actual (Negative)
Revenues:

Taxes $ 156,243 173,994 17,751
Intergovernmental revenue 4,300 (4,300)Investment income 500 526 26 Total revenues 161,043 174,520 13,477
Expenditures:

Current:

Public works 113,500 79,720 33,780General government:

Services and charges 1,000 - 1,000
Total expenditures 114,500 79,720 34,780
Net change in fund balance 46,543 94,800 48,257
Other financing sources (Uses):

Transfers out (50,000) (8,818) (41,182)
Total other financing sources (uses) (50,000) (8,) (41,182) Net change in fund balance (3,457) - (3,457)
Fund balance, beginning of year 73,270 73,270 -Fund balance, end of year $ 69,813 159,252 89,439 99 CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM:

ORIGINATING DEP: Finance CITY MANAGER: tà4tk1-&PREPARED BY: David Maistros, City Manager Matthew Baker, Finance Director
SUBJECT: Cybersecurity Policy
RECOMMENDED ACTION(S): Adopt the City of Avalon Cybersecurity Policy and authorize the City Manager or their designee to amend the plan as necessary.

REPORT SUMMARY: The City of Avalon (“City”) Cybersecurity Policy (“Policy”) was developed to support, maintain, and secure the City’s critical Information Technology Resources, infrastructure and data systems. The purpose of this Policy is to establish guidelines for the acceptable use and security of the City’s Information Technology Resources, including data breach reporting and incident response. The City created this Policy to ensure that its Information Technology Resources are used properly by its employees, contractors, agents, and other resource Users and to meet cyber insurance coverage requirements.GOAL ALIGNMENT: Sustainability of critical operations FISCAL IMPACTS: None
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City will not be incompliance with general system security standards for cyber insurance coverage.

FOLLOW UP ACTION: Implement City Council direction.

ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.

ATTACHMENTS: Cybersecurity Policy, Resolution of Adoption RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OFT HE

CITY OF AVALON ADOPTING THE CYBERSECURITY POLTCY
The City Council of the City of Avalon does determine, find and resolve as follows:

Section 1. Ike Cybersecurit’ Policy is hereby adopted and approved.

PASSED, APPROVED AND ADOPTED this 2l day of March. 2023.

Ann H. Marshall — Mayor
ATTEST:

Gabrielle Morones. Deputy City Clerk

CITY OF AVALON

CYBERSECURITY POLICY

TABLE OF CONTENTS
Page
I. Purpose and Scope

2. Definitions

3. Policy Enibreernent 2

4. Acceptable Use 3

5. Security Protocols 4

6. Remote Access 5

7. Electronic Mail (‘Email”) 7
8, City-Owned Mobile Communication Devices 8

9. Connecting to CiIys Network. Application Services, and Information lechnology Resources 1 0

10. Data Breach Reporting 11
II. Training 13

CITY OF AVALON

CYBERSECURITY POLICY

1. Purpose and Scope

1.1 The City of Avalon (“City”) is dedicated to developing a strong Cybersecurity Policy (“Policy”) to support. maintain, and secure the City’s critical Information TechnologyResources. infrastructure and data systems. The purpose of this Policy is to establish a policy and guidelines for the acceptable use and security of the City’s InformationTechnology Resources. Thc City created this Policy to ensure that its InformationTechnology Resources are used properly by its employees, contractors, agents. andother rcsourcc Users.The rules and obligations described in this Policy apply to all Users of the City’sInformation ‘lechnology Resources, wherever they may be located. Violations mayresult in disciplinary actions, up to and including tcrmination, and civil and/or criminal liability. It is every User’s duty to use the City’s Information Technology Resources responsibly, professionally, ethically and lawfully.

2. Definitions

2.1 “Information Technology Resource
Tools that allow access to technological devices, or are technological devices themselves that service information, access information, and the information itself.

These resources include, but are not limited to, all City-provided computers. mobileconnection devices, and servers; desktop workstations, laptop computers. handheldcomputing and tracking devices; cellular and office phones; network dcvices such asdata, voice and wireless networks, routers, switches, hubs; peripheral devices such asprinters, scanners and cameras; pagers, radios, voice messaging. facsimiletransmissions, copy machines, electronic communications, external network accesssuch as the Internet; software, including packaged and internally developedapplications; and all information and data stored on City equipment as well as any otherequipment or communications that are considered an Information Technology Resource.

2.2 “Personal Information”
Personal Information is a person’s first name or first initial, and last name, incombination with any one or more of the following data elements, when either thename or data elements are not encrypted:

1. Social security number;

2. Driver’s license number or CA identification card number;

3. Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual’s financial account;
6505900000\4 1071 512.5

4. Medical information (any information regarding an individual’s medical history. mental or physical condition, or medical treatment or diagnosis by a health care prolessional): or

5. Health insurance information (an individual’s health insurance policy number or subscriber ID number).

Personal Information also means a User name or email address. in combination with apassword or security question and answer or password that would permit access to an onl inc account.

Personal Information does not include publicly available information that is lawliillvmade available to the general public from federal, state, or local government records.

2.3 “Security Breach”
The unauthorized acquisition of computerized data that compromises the security.confidentiality, or integrity of Personal Information maintained by the City or by theCity’s vendors. Good faith use of Personal Information by an employee in the courseof City business is not a security breach, provided that the Personal Information is not used or subject to unauthorized disclosures.

2.4 “User”
Any person who uses Information ‘technology Resources. This includes employees.contractors, consultants, vendors, volunteers, temporary agency employees. guests. student interns and any other person who may have access to Information ‘lechnology Resources.

3. Policy Enforcement

3.1 The City Manager and his or her designee shall have the primary responsibility fbr enloreing this Policy. lhc City Manager will he responsible for the establishment of policies, operating procedures and guidelines governing the technical architecture.usage. security, backup and recovery for Information Technology Resources.

3.2 Any User who violates this Policy may he subject to discipline, up to and including employment or contract termination, civil and criminal liability and removal from Citypremises or access to City Information Technology Resources.

3.3 Any User learning of or reasonably suspecting any misuse of Information Technology Resources shall notify their supervisor, who shall notify the City- Manager or their designee.

3.4 Any user who receives communications or messaging that they reasonably suspect may he illegal or may reasonably be considered offensive, disruptive. harassing. defamatory or threatening towards the City, any User, or any third party shall advise their supervisor, who shall notify the City Manager or their designee. -2-
6505900000\4 1071512.5

3.5 The absence of written policies, procedures, standards, or guidelines governing a specific issue does not relieve the User from the responsibility for the acceptable usc and sccurity of City provided Information Technology Resources as set forth in this Policy.

3.6 Authorization for access to an Information Technology Resource must comply with criteria, reviewed and approved by the City Manager or their designec.

3.7 All Information Technology Resource Users must complete and submit a “User Acknowledgement Form” (Exhibit A to this Policy). Existing employees shall complete and submit the form within thirty (30) days of implementation ofthis Policy. New Users shall complete and submit the form before access is granted to Infomation TechnologyResources.

4. Acceptable Use

4.1 The City is the sole owncr and may monitor and disclose contents and usage at any time of any Information Technology Resource provided to Users. There is no reasonableexpectation of privacy in the use of any Information Technology Resource.

4.2 Users are responsible for the acceptable use and security of Information Technology Resourccs designated for their use even if another group, division, or agcncy has beensubcontracted to provide the support for these resources. Furthermore, if Information Technology Resources are sold or released while in the possession of a User withoutthe appropriate authorization, the User may he subject to discipline, up to and includingemployment or contract termination, civil and/or criminal liability, and removal fromCity premises.

4.3 City-ow-ned Information Technology Resources shall only be used for official City business.

4.4 Abuse ofthis Policy may subject the User to discipline, up to and including employment or contract termination and removal from City premises or access to City InformationTechnology Resources. In determining whether to impose discipline, the following factors will be taken into account: (1) whether the use interferes with the User’s or any other user’s job duties or routine business activities; (2) whether the use results insignificant expense to the City; (3) whether the use is for illegal practices, personal financial profit, outside employment, or user’s promotional activities; or (4) whether the use compromises any other City policies.

4.5 Information Technology Resources must not be used for or contain any material that may reasonably he considered offensive, disruptive, harassing. dcfamatory or threatening towards the City or any individual. Furthermore, Users are prohibited fromengaging in any internal or external communications using Information Technology Resources that encourage or promote violence. racism, sexism, drugs. illegal conduct. pornography. gambling, betting, or other subjects that would he offensive to a reasonable adult in the work environment. Nothing in this section shall be construed to -3-
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preclude any use that is objectively reasonably necessary for the performance of’ an emplovees job responsibilities.

4.6 Any Information Technology Resources assigned to or in the possession of a User must be returned to the City when City management determines that the use ofthose resources is no longer required to conduct official City business.

4.7 Information Technology Resources that are for the purpose of external contact by the general public shall be reviewed and approved in writing by management of the department or organization submitting the information for public access.

5. Security Protocols

5.1 Secure Areas

5.1.1 Protected and restricted information must be stored securely. A risk assessment should identify the appropriate level of protection to be implemented to secure the information being stored.

5.1.2 Identification and access tools/passes (e.g. badges, keys. entry codes. etc.) must only be held by officers authorized to access those areas and should not he loaned/provided to anyone else. Keys to all secure areas housing City-owned Information Technology Resources are held centrally by Administration Department. as appropriate. Keys shall not he stored near these secure areas or lockable cabinets.

5. 1 .3 Physical security must begin with the building itself and an assessment of perimeter vulnerability must be conducted. The building must have appropriate control mechanisms in place for the type of information and equipment that is stored there.

These could include, but are not restricted to. the fbi lowing:
• Windo and door locks:
• Access control mechanisms fitted to all accessible doors (where codes are utiliied they should he regularly changed and known only to those people authorized to access the area/bulding):
• CCIV cameras:• StalTed reception area: and
• Protection against damage - e.g. fire, flood. vandalism,

5.1.4 In all cases where security protocols are in place, instructions must be issued to address the event of a security breach. Where breaches do occur, or a member of staff leaves outside normal termination circumstances, all identification and access tools/passes(e.g. badges, keys etc.) should be recovered from the subject staff member and any door/access codes shall be changed inllrlediately.

5.2 Equipment Security

5.2.1 All Information Technology Resources shall be located in suitable physical locations that:
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5.2.1.1 Limit the risks from environmental hazards — e.g. heat. tire, smoke. water, dust and vibration;

5.2.1.2 Limit the risk of theft — e.g. if necessary items such as laptops should he physically attached to the desk; and

5.2.1.3 Allow workstations handling sensitive data to be positioned so as to eliminate the risk of the data being seen by unauthorized people.

5.2.2 Personal computing devices should not have data stored on the local hard drive.

Data should he stored on the network file servers where appropriate. This ensures that information lost, stolen or damaged via unauthorized access can be restored with its integrity maintained.

5.2.3 All servers located outside of the City’s data center must he sited in a physically secure environment. Business critical systems should be protected by an uninterrupted power supply to reduce the operating system and data corruptionrisk from power failures. Ihe equipment must riot he moved or moditicd by anyone without authorization from Administration.

5.2.4 All items of equipment must be recorded on an inventory, both on the Departmental and the Information Services inventory, Procedures should be in place to ensure inventories are updated as soon as assets are received or disposedof.

5.2.5 All equipment must he security marked and have a unique asset number allocated to it. This asset number should be recorded in the Departmental andthe IS / IT inventories.

5.2.6 For portable computer devices, please refer to Section 8 of this Policy.

5.3 Cabling Security

5.3.1 Cables that carry data or support key information services must he protected from interception or damage. Power cables should be separated from networkcables to prevent interference. Network cables should be protected by conduit, and where possible, avoid routes through public areas.

6. Remote Access

6.1 Authorized Users shall use a virtual private network (“VPN’) to gain secure remote access to the City network using SonicWall VPN.

6.2 Access to the City’s network or Information Technology Resources via VPN and dialup services will be limited to those services specilicaIly required for City-related business only.
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6.3 Only City-owned Information Technology Resources may be used for VPN and dial-up services unless specifically authorized by the City Manager or their designee via a notation on the service request form.

6.4 Non-City ow-ned Information lechnology Resources that are authorized for remote access services must comply with City security. antivirus, and spyware requirements in order to minimize potential exposure to malicious viruses, worms, and related securitythreats. This would include keeping this software current with the latest Microsoft Windows patches. software updates and antivirus definition files.

6.5 Non-City owned Information technology Resources that are authorized for remote access services must comply with City: firewall security- requirements in order to minimize potential exposure to security- threats by- running a current enterprise or personal firewall with regular updates.

6.6 Remote access services are strictly controlled via account and password authentication.

These accounts are subject to periodic password changes.

6.7 It is the responsibility of remote access Users to ensure that non-authorized individuals do not use these services and the account and password information is not shared.

6.8 Users must remain constantly- aware that remote access services are literal extensions of the City network and that they provide a potential path to sensitive information.Information Technology Resources using City-owned remote access computer services (‘RAS”) must not be left unattended. Ihe User must take every reasonable measure to protect City assets.

6.9 RAS are considered “as needed.” RAS activity is monitored, and if a RAS service is not used for a period of six (6) months, the account will expire. If remote access is subsequently required. the individual must request a new account. The City reservesthe right to monitor, record. and restrict any traflic via remote access services.

6.10 The City reserves the right to monitor, record. and restrict any traffic via RAS.

6.11 When actively connected to the City’s network or Information Technology Resources.

VPN services will temporaril’ disconnect other network connections.

6.12 Remote access Users will automatically be disconnected from the City network after thirty (30) minutes of inactivity unless authorized by exception. The User must then logon again to reconnect to the network. Pings or other artificial network processes are not to he used to keep the connection open.

6.13 When using Outlook for Web Access (OWA). Users must not save their account name and password in the Internet browser. Otherwise, saving such account information willallow anyone immediate access to OWA services for that individual account. -6-
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614 Use of remote access programs (such as PCAnywhere. WinVNC. (iotoMyPC. etc.) is prohibited unless authorized by a department head and the City Manager or theirdesignee.

7. Electronic Mail (“Email”)

7.1 City business shall be conducted using City email accounts. not personal email accounts.

7.2 Emails created by City employees in the course of doing business using City email accounts are the property of the City, just as hard copy documents arc property of the City.

7.3 City employees have no expectation of privacy as to the content of their emails created and/or sent using the City’s email system or Information Technology Resources. TheCity is authorized to access and. at its discretion, disclose any message sent over its email system or City-owned Information Technology Resources for any purpose.

7.4 Each employee is responsible for determining ifan email is a “public record” t ithin the meaning of thc Public Records Act, and for retaining any ernails that are public records l’or two (2) years or per their Department’s records retcntion schedule, whichever is longer

7.5 Messages in an employee’s mailbox (inbox, sent items and all other folders and subfolders) maybe automatically deleted after two (2) years, unless otherwise provided in a City policy.

7.6 For messages to he retained longer, please contact the the City Clerk or their designee for instructions on archiving email.

7.7 System backups are for system failure usc only. and do not substitute for the employees’ responsibility to retain their emails that are public records in accordance with this Policy.

7.8 Personal use olCity email is strictly prohibited.

7.9 Personal business shall bc conducted using only personal email accounts, avoiding work hours to the extent practical.

7.10 Promoting political or religious opinions or positions using City email accounts is prohibited.

7.11 Users are encouraged to consider the content of their email compositions carefully. If it would be emban’assing to see printed in a newspaper. L’sers should not write it in an email used for City business.

7.12 Emails are correspondence that may constitute official public records that must be retained in accordance with the California Public Records Act and the City’s recordsretention policy. State law defines “public records” as “any writing containing -7-
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information relating to the conduct of the publics business prepared. owned, used, or retained by any stale or local agency regardless of physical form or characteristics”

8. City-Owned Mobile Communication Devices

8.1 It is the policy of the City that all City-owned mobile communication devices (“MCD”) are used for official City business and in a sale, cost effective manner consistent with applicable laws and regulations.

8.2 Users shall he responsible for:

8.2.1 Using MCDs for City-business only;

8.2.2 Not using MCDs while operating a vehicle, unless the MCD is used in a manner that it is designed and configured to allow hands-frec listening and talking and it is used in that hands-flee, voice-operated mode as speci lied in California Vehicle Code sections 23123 and 23123.5;
8,2.3 Complying with all federal, state, and local laws. regulations. or policies and procedures governing use of MCDs;

8.2.4 Downloading or purchasing only applicable City-business related applications arid not downloading games, music, ringtones. and non-City—business related applications on MCDs:

8.2.5 Only using City email accounts on MCDs:

8.2.6 Not making international calls unless such calls have been pre-approved h’ User’s supervisor;

8.2.7 Securing MCDs against unauthorized use by using appropriate passwords:

8.2.8 Only using a secure wi-fl environment when the cellular network is not available (e.g.. City wi-li, City guest wi-li. a password only accessible personal home xvifi. City issued mobile wi-fl/hotspofl; and

8.2.9 Protecting MCDs from loss. damage. or thell.

8.3 MCDs and related services shall he provided to users that have a work-related need For such device and services and do not have a technology allowance. As such, the City expects appropriate and responsible use ofMCDs. MCDs shall remain the sole propertyofthe City.

8.4 MCDs are City property. As such. the City hereby reserves its right to:

8.4.1 Investigate, monitor, inspect, retrieve, track and locate, and read any communication or data composed. transmitted, or received through voice/data services, online connections and/or stored on City servers or other City property, -8-
65059.00000\4 1071512.5
ithout further notice to Users, to the maximum extent permissible by la as well as the User’s applicable labor agreement;

8.4.2 Disable, deactivate, and/or terminate the User’s access to MCDs for any reason; and

8.4.3 Disable or deactivate a Users access to the City’s network.

8.5 Public Records / No Expectation of Privacy

8.5.1 Content stored on MCDs is subject to the California Public Records Act and the City’s Records Retention Policy, unless otherwise exempted.

8.5.2 There is no reasonable expectation of privacy when using MCDs. The City has the right to review all records related to N4CDs including, but not limited to:billings, text messages. and internet usage logs.

8.6 MCDs shall not be used for or contain any material that may reasonably be considered offensive, harassing. defamatory, or threatening. MCDs shall not be used to access or engage in any internal or external communications that encourage or promote violence.racism, sexism, drugs, illegal conduct, pornography, gambling. betting. abusive language, profhnity. or other subjects that would be offensive to a reasonable person.

8.7 MCDs shall not be used to record or eavesdrop on any conversation(s) without the knowledge and consent of all parties to the call, except as permitted by law.

8.8 Establishing New or Changing Existing MCD Accounts

8.8.1 Departments shall provide a copy ofthis policy to the User and assist User with completing the User Acknowledgement Form (Exhibit A).

8.8.2 Departments shall determine the type of MCD device and service plan needed based upon the User’s job duties and requirements.

8.8.3 Upon receipt of the MCD. the Finance Department shall record specific information regarding the MCD including device type. model number, serial or device number and assign a unique asset tag number and log it in the City’s inventory system. IT staff shall also enter MCD device information (e.g.. phone numbers, serial/IMEI, name of User, Department ID codes, date of activation, MCD description, and anticipated cost) into the City’s MCD billing information system.

8.8.4 The Finance Department shall then activate and test MCD devices before deployment to the User(s).

8.9 Lost or Stolen MCD
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8.9.1 In the event an MCD is lost, stolen, suspected of being compromised or is compromised (e.g.. through virus or malware). the Lser or User’s supervisor/manager shou]d immediately notify the IT Department that the MCD is no longer secure. The IT Department shall take immediate steps to wipe and disconnect the lost/stolen MCD from all City services.

8.10 User Separation

8.10.1 When a User separates horn the City. the User’s supervisor/manager shall immediately notify the IT Department by following the notification procedures outlined in the City’s Personnel Rules and Regulations.

8.10.2 Users shall be requ red to rcturn their assigned MCD or produce an MCI) for inspection.

8.10.3 The Finance Department shall reset the assigned MCD lo factory defaults and disconnect services. If the Department requests reassignment of the MCD. the Finance Department shall evaluate the MCD device for continued service or disposition, and the MDL shall coordinate with the Department to transfer the MCD device to a new User,

8.10.4 The Finance Department shall update the City’s MCD billing system and the inventory asset record to reflect the changes to the MCI).

9. Connecting to City’s Network, Application Servjces, and Information Technology Resources

9.1 The ability to use personal computing devices or mobile connection devices to access the City’s network and data services will be considered upon request of the employee.

Employees must obtain Department head approval in addition to providing supporting justification for their request. All requests for use ola personal computing device must he submitted in writing via the proper form sent to the attention of the City Manager ortheir designec. along with justification. The Administration Department shall review and approve or deny the request. The intent of the request process is not to impede or prevent the usc of personal computing devices in the workplace. hut rather to help ensure they are used in a secure and productive manner.

9.2 It is the responsibility of all Users who choose to connect to the City’s network or Information Technology Resources with an employee-owned personal coni puting device:

9.2.1 To be aware that the City is hereby held harmless from any loss, expense. claim or liability arising from or related to the use of the employee-owned personalcomputing devices by ally User whether authorized or unauthorized:

9.2.2 To provide their own copies of current and licensed software and applications:
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9.2.3 To comply with all valid public records requests for copies of City data or records stored on any employee-owned personal computing device, to the extent required by law;

9.2.4 To take reasonable measures to secure their devices against computer viruses, Trojans, malware, or other malicious threats, including, but not limited to, allowing automated device monitoring and physical inspeclions by the Administration Department. the use of anti—virus and anti—malware programs. and the timely application of software updates:

9.2.5 To secure the device with a login passcodc and enable remote device locking. data wiping, and other similar protections in the event the device is lost or stolen:

9.2.6 To maintain their device at the employees sole expense;

9.2.7 Jo prevent the sharing of a network connection, either wired or wireless, with others; and

9.2.8 To only connect to the City’s network and Information Technology Resources using VPN connection, via web services. virtual desktop infrastructure, or to access the employee’s City Outlook account via web applications.

10. Data Breach Reporting

10.1 All City Employees and Users shall make every reasonable cffort to maintain the security of computerized data that contains Personal Information. In the event that a security breach occurs, the following procedure will be implememed:

10.1.1 Reporting. Any employee or User that becomes aware of a security breach, or believes a breach may have occurred, should contact the City Manager or thcir designee immediately.

10.1.2 Identification. A coordinated effort will he made to validate a reported data breach. Activities will include a review of computeriied systems and net\\ork services to identify the scope of the data breach, duration of exposure. data sources affected, method of data loss, and responsible parties for the data breach.

10.1.3 Eliminating Unauthorized Access. Unauthorized access to Personal Information will be blocked via physical and/or logical controls on computer systems andnetwork resources.

10.1.4 Containment and Ouarantine. Efforts will he made to contain the further loss of Personal Information. Compromised systems vill be examined and, as necessary, quarantined to prevent further loss of Personal Information.

10.1.5 Preservation of Evidence. Backups of affected systems will be made. along with logs from security monitoring and intrusion prevention resources in order to preserve evidence for investigative purposes.
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10.1.6 Recovery. Upon implementing corrective actions to prevent the identified data loss, affected systems will be restored to normal operations.

10.1.7 Remediation. Actions will be identified to prevent the recurrence of this Personal Information loss.
1o.l.g Notilication. If a security breach has occurred. the individuals whose Personal Information was compromised will he provided a disclosure notice from the Ci iv.

10.1.8.1 The notice will he made iii the most expedient time possible and without unreasonable delay. However, if a law enthrcernent agency determines that the notification will impede a criminal investigation, the required disclosure must be made after the law enforcement agency determines that it will not compromise the investigatiolt

10.1.8.2 The Administration Department is responsible for managing the provision of the disclosure notices. Notices will he made by CS mail and/or email. depending upon what contact information is available for the affected individuals. In addition, a notilication of the breach will beposted on the main page ofthe City’s website for a pcriod of not less than 30 days.

10.1.8.3 Content of Notice. The security breach notice will he written in plain language. and will contain, at a minimum, the following information:

10.1.8.3.1 The name and contact information for the City, and the date the noticc is prepared;

10.1.8.3.2 A list of the types of Personal Information that were or arc reasonably believed to have been the subject of a
breach;

10.1.8.3.3 If known at the time of the notice, the date of the breach. or estimated date, or the date range during which the
breach occurred:

10.1.8.3.4 If appropriate. whether the notilication was delayed as a result of a law enforcement investigation;

10.1.8.3,5 A general description of the breach incident;

10.1.8.3.6 The toll-free telephone numbers and addresses of the major credit reporting agencies. if the hi’each exposed a social security number or a drivers license or CA iclentitication card number; and
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10.1.8.3.7 Summary of what the City has done or is doing to investigate the data hteach, mitigate the e[Yccts. and prevent future incidents.

10.1.9 Notification to Attorney General. If a single security breach requires notification to more than 500 California residents, a sample of the notice must also be sent electronically to the Attorney General (with any PersonalInformation redacted). l0.l.l0Notice if Computerized Data Is Not Owned by the City. If the Citvs investigation determines that computerized data owned by others was breached. the City will notify the owner or licensee of the breached computerized data immediately following discovery. If a law enforcement agency determines that the notification will impede a criminal investigation, the required disclosure can be delayed, but must be made after the law enforcement agency determines thatit will not compromise the investigation.

11. Training

11.1 The Administration Department shall develop and implement an information technology security awareness and education training (‘iT Training’) program thatcovers the following topics:
• Acknowledgement and acceptance of the City’s Cybersecuritv Policy (Exhibit A):
• Privacy training;• Protecting sensitive information;
• Physical and information security;
• Appropriate email use:
• Protecting MCDs and portable media;
• Social engineering awareness; and
• Incident response and learning from past incidents.

11.2 All Users of City-owned Inlbrmation Technology Resources must take annual IT Training. In addition to training, the City’s IT Training program will include unscheduled awareness assessments to assure compliance with the training. New Users shall complete training within thirty (30) days of hire date.

11.3 Awareness reinforcement and additional training may be provided through newsletters, posters. phishing campaigns. sereensavers, webeasts. workshops and nationalcybersecurity related events.

11.4 Records of training completion are required to be retained by and accessible to the Administration Department and departmental human resources staff. Records oftraining completions shall be retained for a minimum of two (2) years from last date of completion. or longer depending on departmental requirements

11.5 Users shall not disable virus protection software and shall notify the City Manager or their designee of any virus detection messages they receive on their system.

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11.6 Users must report suspected information security incidents immediately to the City l\4anager or their designee. All suspected intrusions of the City network or lnformaUon Technology Resources by unauthorized emp]oyees or other individuals are to be reported to the the Administration Department immediately. -14-
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EXHIBIT A: USER ACKNOVLEDGEMENT FORM
A signed paper copy of this form must be submitted, as indicated in sections 3.7 and 7.11 of the Cybersecurity Policy, for authorization to access to any Information Tcchnology Resources.

An electronic acknowledgement must be completed for authorization of a change in privileges associated with an existing User-ID. or periodic reauthorization of an existing Uscr-ID. The City will not accept modification to the terms and conditions of this agreement.

User Name (Printed):

User’sDepartment:

Org#______________________
User’s Business Telephone Number:
__________________________________________
User’sBusinessAddress:
_____________
I, the User. agrce to take all reasonable precautions to assure the City’s internal information, or information that has been entrusted to the City by third parties (stick as customers). will not be disclosed to unauthorized persons unless required by law. At the end of my employment, appointment, or contract, with the City, I agree to return to the City all Information Technology Resources and MCDs to which 1 have had access in order to do my job. I understand that I am not authorized to use any Information Technology Resource for non-employment related purposes. nor am I at liberty to provide any Information Technology Resource to third partieswithout the express written consent of the City Manager and/or designee.

I have read and understand the City’s Cvhersecurity Policy and its relationship to my job. I understand and agree that violation of the City’s Cbersccurity Policy may he grounds For discipline up to and including termination of my employment, and I agree to abide by the Policy as a condition of my employment. 1 understand that written Information Technology Resource Policies may he established for Information Technology Resources, in conjunction with this policy, and that the written policies will be made available by the Administration Department on the City’s Intranet web site.

Information Technology Resource policies will he updated and communicated to all Users of the resource. I understand and agree that it is my responsibility to read the policies and all updates as they become available, and I agree to be bound by and adhere to those policies Printed copies ofthe currentpolicies are available through the City’s Administration Department. I understand that non compliance may he cause for system privilege revocation, disciplinary action up to and including termination, as well as criminal or civil penalties.

I also agree to promptly report all violations or suspected violations of Information Technology Resource Policies and Guidelines to my supervisor, who shall notify the City Manager or his or her designee.

User Signature & Date:

Date Signature
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CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM: 5
ORIGINATING DEP: Administration CITY MANAGER:

PREPARED BY: David Maistros, City Manager
Devin Hart, Management Analyst
SUBJECT: Award On-Call Planning Consultant Contract
RECOMMENDED ACTION(S): Authorize the City Manager or his designee to contract an oncall Planning Consultant for annual cumulative total not to exceed $12500000.

REPORT SUMMARY: The City of Avalon is in need of technical planning and environmentalreview expertise. A job posting for a vacant Planning Director position has been advertised since May 2022; however, the City has not been able to identify a suitable candidate.

Whe the City works to determine next steps for personnel, Staff recommend contracting an oncall planning consultant for a not-to-exceed annual sum of $125,000.00.

Per the procurement policy outlined in the Avalon Municipal Code, Section 3-4.205, an informal bidding process is required. City Staff solicited proposals from qualified firms and have received two responses as of the time this report was authored. After interviewing each firm and speakingwith references, Staff recommends contracting services through Sagecrest — a Southern California based firm that specializes in providing planning and environmental review services to local jurisdictions.

By contacting through Sagecrest, the City will be able to procure specialized services on an as needed basis.

GOAL ALIGNMENT: Sustainability of operations.

FISCAL IMPACTS: FY 2022-23 Planning Services budget has $52000 available (account number 10255-5055).

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City will not havespecialized planning support.

FOLLOW UP ACTION: Implement City Council direction.

ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.

ATTACHMENTS: Sagecrest Proposal

S AG EC RE ST
PLANNING • ENVIRONMENTAL
April 19, 2022
City of Avalon
Attn: David Maistros, City Manager
410 Avalon Canyon Rd. - P.O. Box 707
Avalon, CA 90704
SUBJECT: City of Avalon Contract City Services- Scope of Work Dear Mr. Maistros:

Thank you for the opportunity to submit a Scope of Work for Contract City Services. The team at Sagecrest Planning+Environmental (Sagecrest) specializes in planning and environmental reviewservices to local jurisdictions throughout California. Our planners have expertise in discretionary case processing, preparation and review of zoning codes, specific plans, general plans, and other planning documents, code compliance, project management, and environmental analysis, documentation, and review. Our planners have all worked in various positions for local jurisdictions.

Sagecrest delivers the highest level of service with proactive solutions, ongoing communication, and dependable coordination. We adapt our services to the City’s needs and complement its in-house resources as an extension of City staff. Our planners are trained on the latest planning, zoning andenvironmental legislation and case law and are adept at using public counter permit tracking and GIS systems.

Sagecrest is a local Southern California-based firm with corporate offices in San Juan Capistrano. Ourclients are in Orange, San Diego, Riverside, San Bernardino and Los Angeles Counties, which allows us to be accessible to our clients at a moment’s notice. We are accustomed to being proactive and anticipating the needs of our clients and recommending practical solutions to complex planning issues.

In addition, due to our efficient structure, we are competitive on price while adhering to stringent budgets and schedules.

Sagecrest looks forward to your favorable review of our firm’s scope of work. For additional information or to further discuss our qualifications, please contact me directly at the phone numbers or email below.

Sincerely,
Amy Vazquez, President
Office: (714) 783-1863 x705
Mobile: (714) 914-5605
E-mail: [email protected]
271 28 Paseo Espada • Suite 1524 • Son Juan Capistrano, CA 92675

SAGE CR E ST
Project ApDroach
Sagecrest’s approach to providing planning and administrative services, including representative tasks as appropriate for the class title assigned, is described below:

Sagecrest provides entitlement processing services fordevelopment applications and management of City-initiated projects that may require general plan amendments, specific plans, reclassitications, Conditional Use Permits, subdivision maps, variances, design review, annexations, and other discretionary and administrative actions. Sagecrest planners are skilled project managers who provide excellent customer service to the applicantand the City. We guide the applicant through the entitlement process, timelines, technical studies, interdepartmental comments, revisions to the application, and the review and approval process. Team members utilize the City’s historical files,Geographic Information Systems, permit tracking software, and zoning code to respond to inquiries at the public counter and to research entitlements.

Sagecrest planners are well versed in current environmental law and preparing CEQA documents for discretionary projects or Cityinitiated plans and programs. The Sagecrest team includes planners who can prepare streamlining checklists, Initial Studies,(Mitigated) Negative Declarations, FIRs, Mitigation Monitoring and Reporting Programs, and all required CEQA notices. Sagecrest planners have also managed CEQA consultant teams. We have reviewed and commented on numerous CEQA documents from
outside agencies to ensure the City’s comments and concerns are represented. Christine Saunders, Principal, previously served as the CEQA planner for the City of Anaheim and provides CEQA technical support to the entire Sagecrest team.

Review, analyze and process
discretionary cases consistent
with City codes, policies and
standards. Utilize City
electronic and paper files to
research previous and/orrelated cases.

Prepare environmental
analysis, including, but not
limited to, Initial Studies andNegative Declarations, as required by the CaliforniaEnvironmental Quality Act
(CEQA).

Route plans to City
departments; consolidate
comments; and present
recommendations and
revisions to the applicant.

Work with other departments
to ensure consistency of
comments. Prepare staff
reports and presentations tocitizen committees and
decision-making bodies.

Sagecrest planners are experienced project managers.

Entitlement case processing entails routing plans to various City departments; consolidating comments; resolving internal inconsistencies; and presenting recommendations and revisions to the applicant. Once the application is complete, our planners will write clear, concise, and accurate staff reports and manage the project through public outreach, reviews and approvals by staff, Planning Commission, any other required approval body,and the City Council.

S AG E C R E ST
Maintain communication with Sagecrest takes pride in our communication and customer service applicants, interested parties, with applicants, interested parties, property owners, homeowner property owners, homeowner associations, various governmental agencies, and other City associations, etc. Respond to departments. Our planners quickly learn the frequently asked inquiries about projects from questions (i.e. business license, special events, building inspection residents and applicants, requests, etc.) and provide “one-stop shopping” at the public counter.

Prepare notices for public Sagecrest understands the importance of preparing timely, clear, meetings and hearings in concise and accurate public notices. We are experienced in accordance with City and preparing publications for the newspaper, pasting on and/or near CEQA requirements. the project site and mailing notices to interested parties who may be affected by a proposed action.

Attend community meetings Sagecrest planners have solid presentation skills and have and public hearings, as presented entitlement applications and reports to city councils, required, and present reports commissions, and community groups. We are often to various Boards, commended for the ability our staff must take complex issues Commissions, and the City and present them in a way that is clear and concise. We are Council. passionate about working with stakeholders to communicate the direction of the City early in the process so they understand what the goals are and how to be a part of the ultimate solution.

Review grading and building Plan checking is completed in accordance with conditions of plans for consistency with approval associated with each discretionary approval and discretionary approvals and applicable codes, ordinances and standards adopted by the City. environmental mitigation, if
applicable.

Provide staff at the public Our team members are skilled at reviewing a City’s historical information counter. files, zoning map, zoning code and other data and files to respond to inquiries at the public counter. Our planners are well versed in determining when a project is ready for plan submittal.

We quickly learn the frequently asked questions (i.e. business license, special events, building inspection request, etc.) that are typical to customers visiting City Hall to provide as much assistance as possible and help provide “one-stop
shopping” for questions and needs. We take pride in our exceptional customer service skills.

S AG ECRE ST
Company Information
Sagecrest is an award winning, full service, professional planning firm providing contract planning, land use, and environmental consulting to public agencies throughout California. The American Planning Association (APA) recently awarded Sagecrest the 2018 Emerging Planning & Design Firm by the Orange Section and the 2019 Grassroots Initiative Award by the California State Chapter and the Orange Section.

With considerable experience in Southern California, the Sagecrest team has strong working relationships with key staff, applicants and public officials. Our mission is to provide outstanding serviceat competitive rates to the clients and communities we serve while adding value and making a positive impression with each assignment. Because of our extensive experience and focus on providing planning staff to public agencies, Sagecrest is uniquely qualified to deliver highquaIity on-call services.

We have assembled an exceptional team of experienced planners and administrative services staff. Our staff has professional planning experience in the public sector, giving them a unique and thorough understanding of the processes and the challenges faced by planning departments. We employ highly qualified and experienced professionals whose skills, qualifications and previous responsibilities are a strong match to the needs of the City of Avalon. We ensure this high level of quality by employing the following practices:
• City contract managers interview proposed staff before they are assigned. • Our staff has experience working for public agencies prior to working with us, allowing them to integrate seamlessly into department operations.
• We know that our reputation is our most valuable asset. With that in mind, we do not overcommit our staff and only accept work that our staff has the qualifications to perform. • Our staff maintains ongoing professional development and we provide extensive training in project management, land use law, California Environmental Quality Act (CEQA), writing and public presentation skills.
• We are based in San Juan Capistrano, maintain regular office hours, and are accessible as needed -
• We reliably meet departmental standards, including: deadlines, quality of work products, courtesy and accessibility, accuracy of reports and information given to the public, and responsiveness.
• We ensure we have a clear understanding of expectations and maintain consistent communication with our clients.
• We are committed to providing services that are cost effective while maintaining high standards ol quality and productivity.

S AG EC RE ST
References
City references are provided below. Additional references are available upon request.

V Assignment / ,
T Location / dient Contact aoiect Description
3 erm client
g
Gayle Ackerman
On-Call Planning August 2017- City of Lake Community Development Director Services present Forest 949-461-3463
[email protected]
Jonathan Borrego, AICP
On-Call Planning February 2019- City of Deputy City Manger Services present Oceanside [email protected]
(760) 435-4373
On-Call Planning September 2017- City of Costa Jennifer Le 714-754-5617 Services present Mesa [email protected] Wayne Morrell
On-Call Planning City of Santa Fe Director of Planning July 2017-present Services Springs wayn emorrel I santa fes prings.0 rg (562) 868-0511
Jim Campbell
Deputy Community Development On-Call Planning August 2017- City of Newport Director jcarnpbellnewportbeachcagov
Services present Beach
_(949)_644-3210
/JEX’ N

SAGE CREST
Classification/Title and Hourly Rates
Sagecrest will perform consulting services based on the following breakdown of classification of hourly rates for key personnel:

Position Hourly rate
Planning Director $220.00
City Planner $200.00
Zoning Administrator $160.00
Principal Planner $160.00
Senior Planner $140.00
Associate Planner $120.00
Assistant Planner $90.00
Planning Aide $80.00

CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM:
—_______
ORIGINATING DEP: Administration CITY MANAGER: IDj’LAIlJ( PREPARED BY: Devin Hart, Management Analyst
SUBJECT: Improvements to the Green Pleasure Pier
RECOMMENDED ACTION(S): 1.) Authorize the City Manager to award a contract to the most responsive bidder for a not to exceed amount of $90,000 to paint the Green Pleasure Pier Harbormaster Building. 2.) Approve a budget amendment of $38,000 to account number 10470-6547.

REPORT SUMMARY: The Harbor Master Building, located at 22 Green Pleasure Pier, is in need of significant exterior repair.

Avalon Municipal Code (AMC) Section 3-4.201 (a) and (b) defines a public project to include:
“Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any City-owned, -leased or -operated facility; Painting or repainting of any City-owned, -leased, or —operated facility.” Public projects less than $60,000 may be authorized by the City Manager by negotiated contract or purchase order; however, the AMC requires public projects between $60,001 and $200,000 to be contracted per an informal bidding procedure set forth in Section 3-4.205.

City Staff anticipate the project exceeding $60,000 and are currently procuring bids per the informal bid process. At the time this report was authored, one bid had been received.

With the summer season approaching, time is of the essence to complete this project so as not to negatively impact visitors, overall harbor congestion, or businesses located on the Green Pleasure Pier.

City Staff recommend authorizing the City Manager or his designee to conclude the informal bidding process as set forth in AMC Section 3-4.205 and award a contract to the mostresponsive bidder for a not-to-exceed sum of $90,000. The project is included in the City’s FY 2022-23 Budget Capital Improvement Plan (Project number 207014— Account number 10470- 6547) and is budgeted at $52,500. City Staff additionally request a budget amendment of $38,000 to fully fund the project.

GOAL ALIGNMENT: City Infrastructure.

FISCAL IMPACTS: The total contract amount will not exceed $90000 — Project number 207014, Account number 10470-6547. FY 2022-23 Budgeted amount $52,500. Budgetamendment of $38,OQO.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The Harbor MasterBuilding located at 22 Green Pleasure Pier will remain in its current condition. Additional storm damage may exacerbate conditions and potentially necessitate more intensive repairs in the future.

FOLLOW UP ACTION: Implement informal bidding process and negotiate and award contract.

ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.

ATTACHMENTS: None.

CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM: ‘7
ORIGINATING DEP: Administration CITY MANAGER: QMI-ç
PREPARED BY: Robert Greenlaw, Public Works Director
Devin Hart, Management Analyst
SUBJECT: Phased Procurement for Underground Fuel Tank Replacement Project
RECOMMENDED ACTION(S): 1.) Approve of the design and construction documents for the Underground Fuel Tank Replacement Project. 2.) Authorize the City Manager or his designee to procure the replacement fuel tank and award a contract for a not-to-exceed sum of $200,000 to the most responsive bidder. 3) Authorize the City Manager or his designee to circulate a request for proposals from qualified firms to construct the retaining wall and foundational slab for the new fuel tanks.

REPORT SUMMARY: The State of California requires the owners or operators of specific types of underground fuel storage tanks to permanently close by December 31, 2025. The City of Avalon owns four underground fuel tanks at the Avalon Fuel Dock that fall under this requirement.

With assistance from former Assemblymember Patrick O’Donnell, the City was awarded a $500,000 grant through the State of California Water Resources Control Board to remove the underground fuel tanks located at the fuel dock and install an above ground system in compliance with the new regulations. The granting agreement requires the City to complete the project by November 30, 2023.

The project is included in the FY22-23 Budget and Capital Improvement Plan — Project Number 207004, Account Number 11470-6647 — with $700,000 budgeted.

Due to the complexity of the project and varying skill sets needed for each component, City Staff have split the procurement of goods and services to three phases:

1. Procurement of long lead items — the new fuel tank — utilizing an informal bid process. 2. Solicitation of a request for proposals (REP) to construct the foundational slab and retaining wall at the new aboveground tank storage site.

3. Solicitation of a RPF to remove the existing underground storage fuel tanks and remediate the site incompliance with state and federal environmental standards.

At this time, City Staff recommend authorization to procure the replacement fuel tank per the procurement policy as outlined in the Avalon Municipal Code Section 3-4.205 — Informal Bidding Procedure: Public Projects. Due to the specialized nature of the fuel tank and associated lead time, City Staff request the City Council authorize the City Manager or his designee to negotiate and award a contract to the most responsive bidder for a not-to-exceedsum of $200,000.

Additionally, City Staff recommend the City Council authorize the City Manager or his designee to solicit a RFP from qualified firms to begin construction of the foundational slab and retaining wall needed for the new storage tanks. The design documents are available at city hall for review.

The proposed RFP timeline is as follows:

ACTION DATE
Release of Request for Proposal Thursday, March 23, 2023 Non-Mandatory Pie-Proposal Meeting Thursday, April 5, 2023Location: Avalon Fuel Dock, Two Casino Way, Avalon, CA 90704—2 pm to 3 pm
Last Day to Submit Questions for Clarification Monday, April 10, 2023 received by the City on or before 5 pm
Clarifications Issued by City on or before 5 pm Friday, April 14, 2023 Deadline for Receipt of Proposals Friday, April 21, 2023 submitted on or before 5 pm
Authorization to Negotiate Contract Tuesday, May 4, 2023 City Staff will return to the City Council on Tuesday, April 18, 2023 with a recommendation to award the contract to the most responsive bidder.

The third procurement component of this project will be brought before the City Council at a later date.

GOAL ALIGNMENT: City Infrastructure.

FISCAL IMPACTS: To be determined.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City may not meet the timeline required by the granting agreement with the State of California Water BoardsFOLLOW UP ACTION: 1. Procure above ground fuel tank. 2. Bid slab and retaining wall, return to City Council with a recommendation to award. 3. Return to City Council with REP forunderground fuel tank removal.

ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.

ATTACHMENTS: Fuel Tank Replacement Plans
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1 CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21 2023 AGENDA ITEM:

ORIGINATING DEP: Administration CITY MANAGER: iu,gA.

PREPARED BY: Devin Hart, Management Analyst
SUBJECT: State of Emergency Proclamation for the “2023 Atmospheric River Incidents”
RECOMMENDED ACTION(S): Adopt a resolution making the appropriate findings and declare a Local State of Emergency due to the damages from severe rain and winds to the City of Avalon.

REPORT SUMMARY: On March 1, 2023, Governor Gavin Newsom proclaimed a state of emergency in 13 California Counties due to winter storm conditions. This year, due to a series of natural phenomenas called ‘Atmospheric Rivers,” the City has received an unprecedented amount of precipitation and an increased number of wind events.

The weather conditions have led to flooding, infrastructure failures, increase rock falls and mud slides along Pebbly Beach Road, Roaring Canyon, and St. Catherine’s Way, the appearance of sink holes along the roadways, and damage to City parks and facilities.

As adverse weather conditions persist, City Staff will continue to monitor at risk areas throughout Avalon. The scope of damages and areas impacted may change as rain and wind are forecasted over the next few days.

The fiscal impact of the damages to City, and private infrastructure related to these weather events is still being determined.

There is no fiscal impact to declaring a State of Emergency. However, the City may be limited or prohibited from applying for potential disaster related recover funds without a formal declaration.

GOAL ALIGNMENT: City Infrastructure.

FISCAL IMPACTS: To be determined.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City of Avalon and Catalina community members negatively affected by storm damage may not have theopportunity to pursue county and state agency relief funding.

FOLLOW UP ACTION: City staff will work with county and state agencies following the prescribed steps required to continue to pursue relief funding.

ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.

ATTACHMENTS: Resolution.

RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AVALON

PROCLAIMING EXISTENCE OF A LOCAL EMERGENCY
WHEREAS, Ordinance No. 670 (1979) of the City of Avalon (City) empowers the Director of Emergency Services (City Manager) to request the City Council toproclaim the existence or threatened existcncc of a local emergency; and WHEREAS, the City Council has been requested by the Director of Emergency Services of said City to proclaim the existence of a local emergency therein: and WHEREAS, Governor Gavin Newsom proclaimed a state of emergency in 13 California Counties due to winter storm conditions: and WHEREAS. in 2023. due to a series of natural phenomenas called Atmospheric Rivers,” the City has received an unprecedented amount of precipitation. increased number of wind events, and some flooding;
WHEREAS, weather conditions have led to infrastructure failures. rock falls, mudslides, sink holes and damage to city parks and facilities; and WHEREAS, the fiscal impact of the damages to the City, and private infrastructure related to these weather events is still being determined; and WHEREAS, the City Council does hereby find:

1. That conditions of extreme peril to the safety of persons and property have arisen within the City of Avalon and Santa Catalina Island, caused by the severe rain and windy conditions;

2. [hat the condition and initial assessment of damage to City infrastructure facilities, as outlined in the attached Exhibit A, will exceed the capability of the City to address and correct without the assistance of the County, State and Federal government:

3. That the aforesaid conditions of extreme peril warrant and necessitate the proclamation of the existence of a local emergency; and

4. There is need to take certain actions to protect those who must provide emergency services.

NOW, THEREFORE, IT IS HEREBY PROCLAIMED that a local emergency now exists throughout the City of Avalon and Santa Catalina Island; and IT IS HEREBY FURTHER PROCLAIMED AND ORDERED that during the existence of said local emergency the powers. functions, and duties of the Director of Emergency Services and the emergency organization of this City shall be thoseprescribed by state law, by ordinances and resolutions of this City. and/or resolutionsapproved by the City Council on March 21. 2023.

IT IS FURTHER PROCLAIMED AND ORDERED that said local emergency shall be (teemed to continue to exist until its termination is proclaimed by the City Council of the City of Avalon. State of California.

IT IS FURTHER PROCLAIMED AND ORDERED that the Director of Emergency Services is directed to pursue all available funding and assistance for repairs. emergency services, clean-up and other necessary steps to respond to the local emergencyas well as coordinate with local. State and Federal authorities to assess the next stepsavailable to take action to protect and preserve the public safety, health and welfare.

IT IS FURTHER PROCLAIMED AND ORDERED that the Director of Emergency Services is directed to take all appropriate actions to undertake and address the repairs and conditions noted in the attached Exhibit A as well as other conditions that may exist that are currently unknown hut which were caused by the severe rain and windy conditions.

IT IS FURTHER PROCLAIMED AND ORDERED that a copy of this proclamation be forwarded to the Director of Californi&s Governors Office ofEmergency Services requesting that the Director find it acceptable in accordance withState law; that the Governor of California pursuant to the Emergency Services Act. and all other appropriate powers, issue a proclamation declaring an emergency in the City of Avalon and Santa Catalina Island; that the Governor waive regulations and laws that may hinder response and recovery efforts; that recovery assistance be made available utilizingthe California Disaster Assistance Act funds, State Private Nonprofit OrganizationsAssistance Program funds, Small Business Administration and any other local, State or Federal Funds available to mitigate this emergency which include, but are not limited to, weather response. repair and recovery costs and that the Governor request that the President of the United States make a Presidential Declaration of Emergency in and for the City of Avalon and Santa Catalina Island and make all relevant funds and assistanceavailable to the City of Avalon, Santa Catalina Island and all eligible communitymembers and businesses.

PASSED, APPROVED AND ADOPTED at a meeting of the City Council of the City of Avalon on this 2P1 day of March. 2023, by the following vote:

AYES:

NAYS:

ABSENT:

ABSTAIN:

Ann 14. Marshall. Mayor
ATTEST:

Gabrielle Morones, Deputy City Clerk & Senior Administrative Assistant

ATTACHMENT A
Date: Wednesday, March 15, 2023
Subject: Damages to City Infrastructure Facilities —2023 Atmospheric River Incidents Atmospheric River Conditions began in January 2023 and have continued through today resulting in strongwinds and rains.The purpose of this memo is to inform of the respective damages in Avalon, and attempt to establish approximate costs for the remediation of them. Below is a list of the most significant damages that have beenrealized to date assessed by Robert Greenlaw, Public Works Director.

These assessments are preliminary, and additional impacts may become apparent as we continue to exploreand address immediate issues and plan for long term needs.These assessments focus on areas of City management and/or ownership, as well as the Catalina IslandCompany and the Catalina Island Conservancy. Many areas impacted are privately owned, operated or falloutside of the City boundaries. However, due to the isolation of Catalina Island and the general lack ofredundant services — infrastructure, businesses, etc. — many of these additional impacts directly affect the Avalon community as a whole and our town’s general ability to operate as normal. Furthermore, damages which occurred outside of the City have generated debris which requires salvaging from Avalon’s waters to protect infrastructure and users of Avalon’s harbor and waters.

This assessment does not include the residential and private businesses located in affected areas. At thistime, as adverse weather conditions continue, the extent of any damages is unknown.

Initial Damage Assessment Overview
# Description Damage Cost Owner
(1) Avalon City Hall — 410 Avalon Canyon Road Estimated $10,000 COA(2) Avalon Fire Station — 420 Avalon Canyon Road Estimated $30,000 COA(3) Harbor Department Building — No. 22 Pleasure Estimated $15,000 COA Pier
(4) Crescent Avenue Estimated $300,000 COA(5) South Beach Estimated $25,000 COA (6) Pebbly Beach Road Estimated Si 75,000 COA(7) St. Catherine Way Estimated S50.000 COA(8) Avalon Canyon Road Estimated Si 5,000 COA (9) Waste Water Treatment Plant Estimated $40,000 COA
Initial Estimate Total: $600,000
(ii) Wrigley Road Storm Channel Estimated $10,000 CICO
(12) Clarissa Storm Channel Estimated $10,000 CICO(13) Roaring Canyon Estimated $100,000 CICO(14) Golf Course -Bird Park Estimated $20,000 CICO Initial Estimate Total: $140,000
(15) Interior Roads Unknown CIC
Grand Total Initial Estimate Identified Entities: Unknown *Note: These costs only reflect the cost of further assessment and do not reflect the cost of actual repairs.

CITY OF AVALON CITY COUNCIL
MEETING DATE: March 21, 2023 AGENDA ITEM: 91.

ORIGINATING DEP: Public Works CITY MANAGER: CWP{r-.&
PREPARED BY: Robert Greenlaw, Director of Public Works
SUBJECT: Authorize Emergency Wall Repair Contract for repairs at Crescent Avenue Stairway FOUR VOTES REQUIRED
RECOMMENDED ACTION(S); (1) Make
a finding that emergency measures must be
implemented to protect from economic loss of both City property and the adjoining private property, as well as reduce the hazardous conditions from a landslide below the Crescent
Avenue Stairway. (2) Make
a finding that due to the need to respond with
a highly qualified
contractor relative to the work scope that public bidding is inefficient with this specific work scope and should be dispensed with. (3) Authorize the City Manager or his designee to negotiate and award a construction contract for
a not to exceed $300,000 to complete the work.

REPORT SUMMARY: Public Contract Code section 1102 defines an emergency as “a sudden unexpected occurrence that poses a clear and imminent danger, requiring immediate action to prevent or mitigate the loss or impairment of life, health, property, or essential public services”.

Public Contract Code section 22050(a) authorizes the City Council in a case of an emergency
to pass
a resolution pursuant to four-fifths vote to repair or replace a public facility, take any directly related and immediate action required by that emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids. Prior to taking any action, the Council shall make
a finding, based on substantial evidence, that the
emergency will not permit
a delay resulting from
a competitive solicitation for bids, and that the
action is necessary to respond to the emergency. The information set forth herein, as well as presented during this meeting, constitutes substantial evidence that the emergency will not permit a delay which would result from engaging in competitive bidding and that immediate repairs are necessary to respond to the emergency.

During the March 21, 2023 regular City Council Meeting, the City Council will adopt a resolution
to make the appropriate findings to declare
a local state of emergency due to the damage caused
by severe rain and winds.

Additionally, Avalon Municipal Code section 3-4.111 (c) provides for an exception from bidding and other competitive procedures for “economic efficiency”. It states: ‘If a competitive market
does not exist, or the City will not gain a competitive advantage by using the formal contract bid or other competitive procedure. or where the goods or services may be obtained more economically or efficiently without the procedure, the City may dispense with formal bidding or other competitive procedures.” In 2019 a landslide began to develop below the Crescent Avenue Stairway, at a location above the Catalina Island Yacht Club. Approximately 100 cubic yards of earthen material below the wall rotated and slipped approximately six feet in elevation. Since that event, anytime a significant rain event occurs additional material slips downward in a slow progression, with the amount of material movement relative to the amount and intensity of the rainfall. Staff consulted on-site with the City’s on-call engineering consultants and determined that the material needs tobe removed, but the wall that provides the foundation for the stairway was still competent. The conditions remained the same until rain events late in 2019 where additional earthen materialslipped and exposed the lower wall embedment. Staff again consulted with its on-call consultant, and the contractor that originally constructed the wall. It was determined that a corrective action needed to be pursued to protect the integrity of the wall. City Staff solicited proposals from qualified firms to determine the best course of action. The City received two proposals; however,the conditions stabilized and no action was taken.

During the recent Atmospheric River Incidents, the hillside beneath the Crescent Avenue Stairway began to further erode. An assessment has determined that corrective action must be taken immediately. With proposals from qualified firms in hand, City Staff request authorizationfor the City Manager or his designee to negotiate and award a contract for a not to exceed $300,000 to make repairs.

In FY 22/23, $325,000 was budgeted in Capital Project 205002 — Crescent Avenue Stairs (Account number 10550-6547.)
FISCAL IMPACTS: The total contract amount will not exceed $300,000. In FY 22/23, $325,000 was budgeted in Capital Project 205002 — Crescent Avenue Stairs (Account number 10550- 6547.)
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: Potential wall failure could occur that could potentially cause damage to public and private property. Additionally, theearthen material presents a hazard whenever significant rainfall occurs.

FOLLOW UP ACTION: Negotiate and award the construction contract.

ADVERTISING, NOTICE AND PUBLIC CONTACT: Pursuant to the Brown Act.

ATTACHMENTS: None.