Avalon City Council
September 3, 2024

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A conflict of interest occurs when a public official’s private interests and his or her public dutiesand responsibilities diverge or arc not consistent. Conflicts of interest may be direct or indirect (e.g., as result of a personal or business relationship). The appearance of a conflict of interest should be avoided as an apparent conflict may undermine public trust if not sufficientlymitigated.

Federal Regulation Governing Conflict of Interest (23 CER 172J(b)(4)) Requires that:
• Local agency shall maintain a written code of standards of conduct for employees engaged in the award and administration of engineering and designservice contracts; • No contracting agency employee who participates in the procurement, management, or administration of federal funded contracts or subcontracts shall have, directly or indirectly, any financial or other personal interest in connection with such contract or subcontract;
• No person or entity performing services for a contracting agency in connection with a federal funded project shall have, directly or indirectly, any financial or other personal interest, other than employment or retention by the contractingagency, in any contract or subcontract in connection with such project; • No person or entity performing services for a contracting agency in connection with a federal-aid highway funded project shall have, directly or indirectly, any financial or other personal interest in any real property acquired for the project; • No contracting agency employees or agents shall neither solicit nor accept gratuities, favors, or anything of monetary value from consultants, potential consultants, or parties to subagreements;
• Local agency shall disclose in writing any potential conflict of interest to FHWA Consultants Performing Work on Multiple Phases of Federal-aid Projects Local agencies sometimes wish to hire the same consultant firm to perform constructionengineering and/or inspection services on the same project on which the firm also performed design services. This can cause project delivery efficiencies, as the design firm is well-suited to verify that the project is being constructed in accordance with the design and can resolve issuesrelated to the design on behalf of the contracting agency. However, this may also pose a potential conflict of interest if the firm has a vested financial interest in failing to disclose deficiencies in its design work product and seeks to insulate itself from pecuniary liability insubsequent phases of the project, such as minimizing or ignoring design errors and omissions, rather than serving the best interests of the contracting agency and the public. Procuring a different firm from the design firm to provide the construction engineering and/or inspectionservices provides another level of review and reduces the risk of, or potential for, a conflict of interest.

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Although federal regulations do not expressly prohibit the same firm from providing serviceson subsequent phases, the local agencies are responsible for ensuring the public interest is maintained throughout the life of a project and that a conflict of interest, real or apparent, doesnot occur or is sufficiently mitigated by appropriate public agency controls. Prior to allowing aconsulting firm to provide services on subsequent phases of the same project, the contractingagency must establish appropriate compensating controls in policies, procedures, practices, and other safeguards to ensure a conflict of interest does not occur in the procurement,management, and admirListrahon of consultant services.

When design arid construction phase services are procured under a single solicitation, the selection of the consulting firm must be based on the overall qualifications to provide bothdesign and construction phase services, which require different skill sets, experience, and resources. Procuring these services under different solicitations may result in selection of amore qualified firm to perform services in each phase, as the most qualified firm to perform design phase services may not be the most qualified firm to provide construction phase services. Similarly, the qualifications and capacity of a firm may change over time. As such, itmay not be appropriate to contract with a consulting firm to provide construction phaseservices at the outset of a design phase, knowing that these services may not be needed for anextended period until the preconstruction phase of the project is complete and construction funding authorized. The contract with a consulting firm providing design phase services on a project may not be amended to include construction phase services unless the desiredconstruction phase services were included within the original advertised scope of services andevaluation criteria of the solicitation from which a qualifications based selection was conducted.All consultants acting in a management support role must complete jbitilt.antj Manageinent Support Role Conflict ofInterest and Conlidentialihi Statement (see Section 101.9:
ceilaneous onsiIeratiQrj in this chapter) and retain it in the local agency files.

Miscellaneous Considerations Authorization to ProceedThe Federal Highway Administration (FF1WA) must give the local agency an Authorization toProceed (E-76) with the work prior to performing of any work for which federal reimbursementis to be requested, (see the LAPM Chapter 3: Project Aut/wrizatton). For state funded projects seeSection W.2: State-Only Funded A&E Contracts and the al Assistance PrQgram Guidelines (LAPG), Chapter 23: Local Agenci, State Transportation fmprovenment Program Projects, for guidance on when work may proceed.

Copies of the Authorization to Proceed and the consultant contract must be retained in the local agency project files for future audit.

10.1.2 IDENTIFYING & DEFINING A NEED FOR CONSULTANTS
The need for a consultant is identified by comparing the project’s schedule and objectives with the local agency’s capabilities, its staff availability of the required expertise, and its funding resources. If the local agency does not have sufficient staff capabilities, it may solicit assistance from another agency, or use a qualified private consultant to perform the required work.

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If the local agency determines that there is a need to solicit assistance from another local agency, or to use a consultant, the District Local Assistance Engineer (DLAE) should be notified if federal-aid funds are to be requested for the project segment to be contracted out.Appointing the Contract Administrator The Contract Administrator is responsible for ensuring the quality of consultant contractproducts or services. The Contract Administrator is appointed as soon as the need forconsultant services is identified. The Contract Administrator is involved throughout the development of the selection process and the contract provisions, and in the administration of the consultant’s work. The Contract Administrator must be a qualified local agency employee or have staff that is qualified to ensure the consultant’s work is complete, accurate, andconsistent with the terms and conditions of the consultant contract. On federal-aid contracts, theContract Administrator or staff members must be a full-time employee and familiar with thework to be contracted out and the standards to be used. The Contract Administrator must alsoabide by the laws, regulations and policies required as part of accepting federal or state funding for their project. Non-compliance with the laws, regulations, and policies may result in loss ofproject funding.The Contract Administrator’s duties are listed in 23 CFR 172.9(d)(1) and include:
• Contract negotiation, contract payment, and evaluation of compliance performance, and quality of services provided by the consultant; • Being familiar with the contract requirements, scope of services to be performed, and products to be produced by the consultant; • Being familiar with the qualifications and responsibilities of the consultant’s staff and evaluating any requested changes in key personnel; • Scheduling and attending progress and project review meetings, commensurate with the magnitude, complexity, and type of work, to ensure the work isprogressing in accordance with established scope of work and schedulemilestones; • Documenting contract monitoring activities and maintaining supporting contract records as specified in 2 CFR 200.333;
• Provides direction to ensure the proposed work is advertised properly;• Prepares and distributes the Request for Qualifications (RFQ), descriptionof work, and Request for Proposals (RFP), if used;
• Prepares the draft contract;• Arranges for preparation before an independent estimate of the value of the work to be contracted out;
• Ensures that the selection procedures are followed;
• Analyzes the selected/best-qualified consultant’s cost proposal; • Ensures contract audit and review procedure is followed; Pag 5of72
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• Ensures that fee/ profit negotiation is conducted and keeps records;• Serves as the local agency’s primary contact person for the successful consultant;
• Monitors the consultant’s progress and provides direction; • Ensuring consultant costs billed are allowable in accordance with the Federal cost principles and consistent with the contract terms as well as the acceptability and progress of the consultant’s work;
• Identifies other local agency staff for the consultant to contact, if needed;• Closes out the contract at completion, by processing the final invoice; completing a mandatory consultant evaluation, and final DBE utilization reports (Exhibit 17-F: Fijial Report Utilization of Disadvantaged Business Enterprises jjrst-Iier Subcontractors).

Segmenting Consultant WorkConsultant services are most effective when consultant work is segmented appropriately. The extent of segmenting depends upon the type and complexity of the work. Combiningpreliminary engineering tasks with the preparation of the required environmental analysis is normally desirable. Preparing an Environmental Assessment (EA) or Environmental Impact Statement (EIS) is more than simply writing a report. Assessment and impact reports include preliminary engineering needed to analyze project alternatives and produce an engineering arid planning assessment. Initial project studies include only as much traffic and engineering analysis of alternatives, as is needed to produce a sound EA or ETS (see L4PMi’!w± Enviroiniteittal Procedures and Standard Environmeri[al Reference (SER) chapters 31:

Environmental Assessment (EA) Pii and cjper 32:v1ronmentalhflc..LStatement (EIS). Final design shall not begin until NEPA environmentalapproval has been received if federal reimbursement is desired.Refer to Figure 10-2: Segmenting Consultant Work below, which illustrates several satisfactoryways to segment consultant activities.

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Figure 10-2: Segmenting Consultant Work
Specify Products to be Delivered
The Contract Administrator identifies the products and services to be delivered as a result of consultant contract work, and minimum qualification of consultant professionals and staff.These vary depending upon the type of projects and the phase of project development beingaddressed.

Scope of Consultant Work
The scope of work, which the contract must include, is a detailed description of the products orservices the consultant is to provide. From a detailed scope of work, consultants respond to aproject advertisement; determine personnel and time requirements; and develop a technicalproposal. Therefore, the scope of work must be clear, concise, complete, and describe thedeliverables, standards for design and other work, quality control measures, acceptance criteria and deadlines.

Non-Discrimination Clause
The Non-Discrimination Clause Article XVI
Statement of Compliance) must be included in each consultant contract. The consultant mustinclude the non-discrimination and compliance provisions of the Non-Discrimination Clause inall subcontracts to perform work under the contract.

Disadvantaged Business Enterprise (DBE) Participation
When administering federal-aid projects, federal regulations (49 CFR, Part 26) require a local agency to comply with the DBE program, and take necessary steps to ensure that DBE firms have the opportunity to participate in the projects. Refer to Chapter 9: Civil Rights and Disadvantaged I3usiness Enterprises for DI3E requirements for A&E Consultant Contracts.

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VelI-stincItired WcIlstiiictiiied Mole Veiv
Proj eels Projech Difficult Complex
With Simple With Complex Projects Projects
Right of Way Right of Way
Requirements Requirements
Preliminary niueemlug
Enviionmeimtal Analysis
Plans. Specifications
&E.stlmates
Right of Way Activities
ttiIlly RelocationConstruction Engineeiing
tzzz:: IL
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Local Assistance Procedures Manual Chapter 10
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Estimated Cost of Consultant Work
An independent estimate for cost or price analysis is needed for all consultant contracts (23 CFR172.7(a) (1) (v)(B)) to ensure that consultant services are obtained at a fair and reasonable price.

The estimate is prepared in advance of requesting a cost proposal from the top-ranked consultant, so the local agency’s negotiating team has a cost comparison of the project to evaluate the reasonableness of the consultant’s cost proposal. The estimate, which is specifically for the use of the local agency’s negotiating team, is to be kept confidential and maintained for records.

A good cost estimate can be prepared only if the scope of work is defined clearly. The scope of work must include a list of the products or services which the consultant is required to deliver, and a time schedule of when they must be delivered.

It should be stressed that all work to be derived from the consultant services, such aspreliminary design, environmental or final design, must be clearly identified in the solicitationof consultant services (RFQ or RFP) and included in the cost estimate. The addition of work to the original scope by amendment should be avoided whenever possible. Contract modificationsare required for any amendments to the terms of the existing contract that change the cost of the contract; significantly change the character, scope, complexity, or duration of the work; or significantly change the conditions under which the work is required to be performed.

Some of the costs estimating techniques are:

Analogous Estimating:

Analogous cost estimating is using the actual cost of a previous, similar contract as the basis for estimating the cost of the current contract. Analogous cost estimating is frequently used to estimate costs when there is a limited amount of detailed information about the project.Analogous cost estimating is generally less accurate and it is most reliable when previousprojects are similar in fact, and not just in appearance, and it uses expert judgment.

Parametric Estimating:

Parametric estimating is a technique that uses statistical relationship between historical dataand other variables to calculate a cost estimate for an activity resource. This technique canproduce a higher level of accuracy depending upon the sophistication, as well as underlyingresource quantity and the cost data. A cost example would involve multiplying the plannedquantity of work by the historical cost per unit to obtain the estimated cost of the contract.Bottom-up Estimating:rThis technique involves estimating the cost for individual work in the contract with the lowest level of detail. This detailed cost is then summarized or rolled up to determine a total cost ofcontract. Cost detail should include estimated hours per task, labor hourly cost for professionaland non-professional classifications, subconsultant costs, other project direct costs, and profit.Labor costs should be broken down to direct labor and indirect cost rates, if possible.

If more than one project or phase of work is to be developed within the consultant contract,separate cost estimates are required for each project or phase of work. Separate cost estimatesare required for each milestone and portion of the work expected to be subcontracted.

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For on-call (as-needed) contracts, the cost estimate/analysis should include at minimum, ahistorical analysis of annual needs for consultant work, professional labor cost and marketanalysis, and reasonable profit analysis.

Determine Type of Contract
Types of contracts to be used are described as follows:
• Project-specific contract is between the local agency and consultant for the performance of services and a defined scope of work related to a specific project or projects. • Multi-phase contract is a project-specific contract where the defined scope of work is divided into phases which may be negotiated and executed individually as the projectprogresses. • On-call contract is a contract that may be utilized for a number of projects, under which task or work orders are issued on an as-needed basis, for an established contract period.

On-call contracts are typically used when a specialized service of indefinite delivery orindefinite quantity is needed for a number of different projects, such as construction engineering, design, environmental analysis, traffic studies, geotechnical studies, and field surveying, etc. Many agencies use these contracts to address peaks in workload of in- house engineering staff and/or to perform a specialized service which the agency does not have. On-call contracts shall specify a reasonable maximum length of contract, not to exceed 5 years, and a maximum total contract dollar amount (23 CFR 172). The maximum dollar amount for all contracts awarded under the solicitation is stated in the solicitation. The maximum dollar amount is the aggregate of the on-call contracts anticipated to be awarded. If the solicitation lists that up to 5 contracts may be awarded, the aggregate amount of these 5 contracts is the maximum contract dollar amount. How many contracts are anticipated to be awarded must be stated in the solicitation. How task orders will be issued must be stated in the solicitation (two options exist:geographically designated areas or additional competitive solicitation to all consultantswho provide the same type of service and awarded a contract under the same solicitation).
o To maintain the intent of the Brooks Act (40 Usc 1101-1104) in promoting open competition and selection based on demonstrated competence and qualifications, oncall consultant contracts established through the RFQ process must meet the following requirements:
• Must define a general scope of work, complexity, and professional nature of services.
• Specify a task order procedure the local agency uses to procure project specific work under the contract.
• No task order is valid unless the on-call contract is still enforced. For example, if the on-call contract is expired, all task orders issued after thecontract expiration date will become invalid.

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a If multiple consultants are to be selected arid multiple on-call contracts awarded through a single solicitation for specific services, the number ofconsultants that may be selected or contracts that may be awarded must be identified.
o Specify procurement procedures in the contracts the local agency will use to award/execute task orders among the consultants:
• Either through an additional qualification-based selection process (see the Two-Step RFQ/RFQ process later in this chapter), OR
a On regional basis whereby the region is divided into areas identified in the solicitation, and consultants are selected to provide on-call services forassigned areas only. The RFP may list multiple regions that allow consultantsto crossover or be a “backup” to other consultants that for specifically documented reasons are not able to perform the work in their assigned region. Per 23 CFR 172.9 (a)(3)(B)(2). The “backup” option needs to be listed in the respective contracts.
• An example of acceptable contract wording in multiple on-call contractsfor the same type of service:
— “Agency has or will enter into three (3) task order contractsfor performance of the Scope of Services identified in Exhibit “A”, including this Agreement (“CM Services Task Order Contracts”). The other CM Services Task Order Contracts are [identify other two contracts by agreement numbers and consultantfirms]. The total amount payable by Agency for the CM Services Task Order Contracts shall not exceed a cumulative maximum total value of Seven Million, Five Hundred Thousand Dollars ($7,500,000) (“NTE Sum”,). it isunderstood and agreed that there is no guarantee, either expressed or implied that this dollar amount will be authorized under the CM Services Task Order contracts through Task Orders. Each time a Task Order is awarded under any of the CM Services Task Order Contracts, the Agency shall send written notflcation to Consultant and each of the otherconsultants entering into the CM Services Task Order Contracts. The notice shall identJij the totalfunds allocated under issued Task Orders, and the remaining unencumbered amount of the NTE Sum. consultant acknowledges and agrees that Agency shall not pay any amount under this Agreement that would exceed the NTE Sum, and Consultant shall notenter into a Task Order that exceeds the NTE Sum.” Determining the Project Schedule
The local agency develops a schedule for performance of work and completion of the project.The schedule must include sufficient time to allow for:
• Selecting the consultant;• Developing the consultant contract;• Completing the A&E consultant contract audit process;• Conducting meetings and project reviews.

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Determine Method of Payment
The method of payment of contract must be specified. Four methods are permitted dependingon the scope of services to be performed reference 23 CFR 172.9(b):
• Actual Cost-Plus-Fixed Fee (see Exhibit_104LSainplostPrpya Example #1);
• Cost Per Unit of Work (see /LbiLiQll.. Example #3);
• Specific Rates of Compensation (see Exhibit 104L Example #2); • Lump Sum (see Exhibit i0 Example #1).

The method of payment to the consultant shall be set forth in the original solicitation, contract, and in any contract modification thereto. A single contract may contain different paymentmethods as appropriate for compensation of different elements of work.

The cost plus a percentage of cost and percentage of construction cost methods of payment shallnot be used. Both of these methods are explicitly prohibited by Federal Regulations.

Actual Cost-Plus-Fixed Fee
The consultant is reimbursed for actual costs incurred and receives an additional predetermined amount as a fixed fee (profit). Federal regulations require that profit be separately negotiated from contract costs. The determination of the amount of the fixed fee shall take into account the size, complexity, duration, and degree of risk involved in the work. The fixed fee is notadjustable during the life of the contract. The fixed fee dollar amount must be clearly stated in the contract.

This method of payment is appropriate when the extent, scope, complexity, character, or duration of work cannot be precisely predicted. The fixed fee limit applies to the total direct and indirect costs. Fixed fees in excess of 15 percent of the total direct labor and indirect costs of the contract may be justified only when exceptional circumstances exist. The contract shall specify areasonable maximum length of contract period and a maximum total contract dollar amount (see Exhibit 10-Fl: Sample Cost Proposal Example #1 and Exhibit 10-R: A&E Sample Contract Lan nac Article V, Option I in this chapter). The contract cost proposal must identify all key employees and/or classifications to be billed. New key employees and/or classifications mustbe approved before they incur work on the contract or the costs can be questioned ordisallowed.

Cost Per Unit of Work
The consultant is paid based on specific item of work performed. The item of work must be similar, repetitious and measurable, such as geotechnical investigation and material testing.

This method of payment is appropriate when the cost per unit of work can be determined withreasonable accuracy in advance, but the extent or quantity of the work is indefinite. Contract payment provisions must specify what is included in the price to be paid for each item. Any item of work not identified in the contract cost proposal is not eligible for reimbursement. Newitems of work (those within the original scope of work only) must be amended into the contract before work is performed. The contract shall also specify a reasonable maximum length of

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contract period and a maximum total contract dollar amount (see Exhibit 10-EL, Example #3 and Exiithii1Qj, Article V ()ption 2).

Specified Rates of Compensation
The consultant is paid at an agreed and supported specific fixed hourly, daily, weekly ormonthly rate, for each class of employee engaged directly in the work. Such rates of pay includethe consultant’s estimated costs and net fee (profit). Federal regulations require that profit be separately negotiated from contract costs. The specific rates of compensation, except for anindividual acting as a sole proprietor, are to include an hourly breakdown, direct salary costs, fringe benefits, indirect costs, and net fee. Other direct costs may be included, such as travel and equipment rentals, if not already captured in the indirect cost rate.

This method of payment should only be used when it is not possible at the time of procurement to estimate the extent or the duration of the work, or to estimate costs with any reasonable degree of accuracy. This method should not be used for project specific contracts and is recommended for on-call contracts for specialized or support type services, such as construction engineering arid inspection, where the consultant is not in direct control of the number of hoursworked, and it also requires management and monitoring of the consultant’s level of effort andthe classification of employees used to perform the contracted work. The contract shall alsospecify a reasonable maximum length of contract period and a maximum total contract dollaramount (see Exhibit 10-i-I, Example #2 and Exhibit 10-1?, Article V Option 3).

Lump Sum or Firm Fixed Price
The consultant performs the services stated in the contract for an agreed amount as compensation, including a net fee or profit. This method of payment is appropriate only if the extent, scope, complexity, character, duration, and risk of the work have been sufficiently defined to permit fair compensation to be determined and evaluated by all parties during negotiations (see Exhibit 20-H: Sample Cost Proposal. Example #1 and otroctLu, Article V, Option 4). Normally, a lump sum contract will be paid in full at end of the contract when completed. However, a lump sum contract can be negotiated withprogress payment if feasible. l’he progress payment shall be based on percent of work complete or completion of clearly defined milestones. The contract cost proposal shall document theagreed upon progress payment and include the necessary milestones costs, or the percent workcomplete schedule.

Changes to Exhibit 10-H requiring rcsubmittal to Independent Office of Audits and Investigations for review:
• Consultant name change• New participating subconsultant• Change in ICR rate

10.1.3 A&E CONSULTANTAUDITAND REVIEWPROCESS
This section outlines the audit and review process for A&E contracts that at any time use state or federal funds. All proposed A&E contracts and supporting documents are

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subject to audit or review by Caltrans’ Independent Office of Independent Office ofAudits and Investigations (fOAl), other state audit organizations, or the federalgovernment. Not all proposed contracts will be audited or reviewed; rather, they will be selected on a risk-based approach.

Applicable Standards
State and federal requirements listed below, and specific contract requirements, serve as the standards for audits and reviews performed.

Local agencies, consultants, and subconsultants are responsible for complying with state,federal, and specific contract requirements. Local agencies are responsible for determiningthe eligibility of costs to be reimbursed to consultants.

Applicable standards include, but are not limited to:
• Caltrans Local Assistance Procedures Manual (LAPM);
• State and Federal agreements between local agencies and Caltrans, (i.e. Master Agreements);
• Project Program SupplementalAgreements;
• 23 United States Code (U.S.C.), Section 112 — Leffing of Contracts; • 40 U.S.C., Chapter 11: the Brooks Act;• 23 CFR, Chapter 1, Part 172 -Procurement, Management, and Administration of Engineering and Design RelatedServices;
• 23 CFR, Chapter 1- Federal Highway Administration, Department of Transportation;
• 48 CFR, Federal Acquisition Regulation (FAR), Chapter 1, Part 31- Contract Cost Principles and Procedures;
• 48 CFR, Chapter 99— Cost Accounting Standards (CAS), Subpart 9900; • 2 CFR, Part 200 -Uniform Administrative Requirements, Cost Principles, and Audit Requirements for FederalAwards;
• United States Government Accountability Office, Government Auditing Standards
-Generally Accepted Government Auditing Standards (GAGAS); • California Government Code sections 4525-4529; and
• Proposed contract terms and conditions.

See section O”Lwes” of this Chapter for links to above referenced standards.

Audit Guidance AvailableThe American Association of State Highway and Transportation Officials, Uniform Audit & Accounting Guide (AASHTO Audit Guide), which is referred to frequently m this seLtion, i a valuable tool to guide local agencies, consultants and Certified Public Accountants (CPA) through the requirements for establishing, and audits of FAR compliant Indirect Cost Rates

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(ICR). The AASHTO Audit Cu is used extensively as an industry guide in the audit and review process.Local agencies may seek accounting assistance from internal audit staff and an independentCPA for compliance. The consultant may seek professional guidance in selecting itsindependent CPA. See also the AASlf[’QAi4itcIcLe, Ch 2.5 C. Selection ofCPA Firm as Overhead Auditor for guidance in the selection process. Training is also offered by FHWA’s National Highway Institute (see h[tp / / www .nhi.fhwa.dot.gov / default.aspx). Coursesoffered include; • Using the AASHTO Audit Guide for the Procurement and Administration of A&E Contracts (FHWA-NHI-231028)
• Using the AASHTO Audit Guide for the Development of A&E Consultant Indirect Cost Rates (FHWA- NHI-231 029)
• Using the AASHTO Audit Guide for the Auditing and Oversight of A&E Consultant Indirect Cost Rates(FHWA-NHI-231030)
If consultants desire training on how to build an ICR and basic timekeeping, there are Indirect Cost Rate and Timekeeping webinars created by the Washington State Departmentof Transportation. The link to the webinars is available at http://www.dot.ca.gov/audits/ (click on Architectural & Engineering Contracts/General A&E Contract Resources/Other State DOT Training Module). For training and additional information provided by Caltrans Local Assistance, visit Caltrans Local Assistance Blog athttp:/ /www.loca1assistanceblopqJ. For FHWA’s Q&A for KRs and audits, and A&E related services, visit FHV\TA at http: / /www.fhwa.dot.gov /proamadrninLqcj.

Allowable Costs23 USC 112 (b)(2)(B) states that any A&E contract or subcontractawarded, whether funded in whole or in part with Federal-aid highway funds in furtherance of highway construction projects, shall be performed and audited in compliance with the Federal cost principles.Local agencies are required to perform a cost analysis to ensure all costs are allowable and in compliance with federal and state requirements and retain documentation of negotiationactivities and resources. Hourly rate(s) for each key personnel and/or classification ofemployee(s) proposed in cost proposals must be reasonable for the work performed andactual, allowable, and allocable in accordance with the Federal cost principles. Costs shall beallowable only if the cost is incurred and cost estimates included in negotiated prices areallowable in accordance with the federal and state regulations and procedures, and contract provisions. Examples of Cost Analysis Worksheets are provided at Exhibit 10-Hi through 4.

Local agencies are required to apply Caltrans accepted consultant or subconsultant’s ICRs, to contracts. An ICR is valid for the one-year applicable accounting period accepted or auditedby Caltrans. Consultants shall update, on an annual basis, ICRs in accordance with the consultant’s annual accounting period and in compliance with the Federal cost principles.For further guidance, refer to 23 CFR Part 172.11 (b)(1). If the consultant is subject to Cost Accounting Standards (CAS), the consultant must use the applicable ICR for the contract.

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A consultant’s accepted ICR for its one-year applicable accounting period shall be applied to contracts; however, once an ICR is established for a contract, it may be extended beyond theone-year applicable period, through the duration of the specific contract, provided all concerned parties agree. Agreement to the extension of the one-year applicable period shall not be a condition or qualification to be considered for the work or contract award. Thecontract must clearly specify the ICR period if it is beyond the one-year applicable period.

Consultants shall account for costs appropriately and maintain records, including supporting documentation, adequate to demonstrate that costs claimed have been incurred, and areallowable, reasonable, and allocable to the contract, and comply with Federal cost principles. iOAI and representatives of the Federal Government have the right to conduct an audit of all contract costs. If the costs are subsequently determined to be unallowable, these costs aresubject to repayment. For further guidance, refer to 23 CFR Part 172 and 48 CFR Part 31.

Generally, whenever local agencies, consultants and/or contractors are unable to provide requested documentation, it shall be viewed that the services were either not performed or the costs not properly recorded. Retention of all documents is required as it reduces the possibility of audit findings and disallowed costs. For more references, refer to Applicable Standards in this chapter.

Approval or Acceptance of Indirect Cost RatesCognizant Letters of Approval A cognizant approved ICR has been audited by a Cognizant agency (a State transportation agency of the State where the consultant’s accounting and financial records are located or a Statetransportation agency to which cognizance for the particular indirect cost rate(s) of a consulting firm has been delegated or transferred to in writing by the State transportation agency where the consultant’s accounting and financial records are located) in accordance with generally accepted government auditing standards to test compliance with the requirements of the Federal cost principles (per 48 CFR part 31) and the cognizant agency has either 1) issued an audit report of the consultant’s indirect cost rate or 2) conducted a review of an audit report andrelated workpapers prepared by a certified public accountant and issued a letter of concurrence with the audited indirect cost ate(s). The cognizant agency approves the ICR and a cognizant approval letter is issued.Caltrans Acceptance of Indirect Cost Rate When the ICRs have not been established by a cognizant agency, Caitrans shall perform an audit or review of a consultant’s and subconsultant’s ICR(s) to provide reasonable assurance of compliance with Federal cost principles.

An audit or review of the ICR may consist of one or more of the following:
a Perform a review to determine if the ICR was prepared in accordance with 23 CFR 172, and 48 CFR, Chapter 1,Part 31;
a Perform an audit to determine if the ICR was prepared in accordance with 23 CFR 1.72, and 48 CFR, Chapter 1, Part 31; and issue an audit report; a Review and accept an ICR audit report and related workpapers prepared by a CPA or another State Transportation Agency;

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The outcome of an audit or review is for Caltrans to approve or accept the ICR so that it can berelied upon for future contracts with the consultant for a given one-year accounting period andfor reliance by other contracting agencies using the same consultant. Local agencies shall ensure that only approved or accepted ICRs of consultants for the applicable one-year accountingperiod be applied to contracts, if rates are not under dispute. Local agencies may check IOAI’s website for consultant’s approved or accepted ICRs. All approved or accepted ICRs are issued an Acceptance Identification (ID) number by TOM that is posted to IOAI’s website athttp:/ /www.dot.ca.gov/hq/audits/. This ID number should be referenced on all future contracts that use the same fiscal year ICR. ICR can be fixed for the life of the contract in prior written document or annually updated. Once it has been updated, it must be annually updated and the most current fiscal year of ICR must be used. - ICks that have not been accepted by Caltrams wifi not be eligible for indirect cost payment. AnICR approved by a cognizant agency may be used across states for the one-year applicableaccounting period, but an ICR accepted by Caltrans may only be applied to A&E contracts withCaitrans or local agency contracts using pass-through Caltrans funding. Local agencies includeCities, Counties, Metropolitan Planning Organization, Special Districts, and Regional Transportation Planning Agencies.

Financial Review Performed Prior to Contract Execution
All consultants, including prime and subconsultants, on a proposed contract with a dollar value greater than $1501-C are subject to an ICR financial review by TOM. The financialdocuments required are detailed in Exhibit 10—A, A&E Consultant Financial Document Review Request Letter and Exhibit 10-A Checklist. IOAI will review the ICR financial documents toeither accept or adjust the indirect cost rate prior to contract execution using a risk-based approach as dictated by factors that include but are not limited to:
• History ofsatisfactory performance and professional reputation of consultant;• Prior FAR compliant history and audit frequency; • Experience of consultant with FAHP contracts;• General responsiveness and responsibility;• The approximate contract volume and dollar amount of all A&E contracts awarded to the consultant by Caltrans or a local agency in California within the last threecalendar years; • The number of states in which the consultant does business;• The type and complexity of the consultant’s accounting system; • The relevant professional experience of any CPA performing audits of the consultants indirect costrate;
• Assessment of consultant’s internal control. Responses to internal control questionnaire, see AASHTO Audit Guide, Appendix B;
• For ICRs that have been adjusted by 1-OAT, the consultant must provide a revised cost proposal that reflects the adjusted ICR.

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Local Agencies Responsibilities
Local Agencies are responsible for obtaining all required ICR supporting documentation fromA&E prime consultants and sub-consultants as outlined in Exhibit 10-A (A&E Consultant Financial Document Review Reques&) and the Exhibit 10-A-Checklist. Local Agencies are responsible for forwarding these documents to fOAl for review. Local agencies are alsorequired to ensure that IOAI has copies of the Exhibit 10-K “Consultant Certification of Contract Costs and Financial Management System” and Exhibit 10-H “Cost Proposal” for all consultants, both prime and sub-consultants. The ICR included in Exhibit 10-H must match the ICR included in the Exhibit 10-K and the consultant’s ICR schedule. The proposed ICR, however, can be lower than ICR in Exhibit 10-K and the consultant’s ICR schedule if the consultant elects to propose a lower ICR. For spanning more than one year, local agencies are responsible for ensuring the Exhibit 10-K and cost proposals are updated annually unless all concerned parties agree to fix the ICR for the term of contract, and this is clearly specified in the contract.

ICR updates are not require to IOAI if the ICR is fixed for the life of the contract. ICR’s are onlyreviewed for consultants that are being awarded a contract, not consultants on a bench orshortlist.The Exhibit 10-H “Cost Proposal” includes contract costs: direct salary or wage rates, fixed fees,other direct costs, indirect costs, total costs, and certification for the costs. Local agencies mustperform and retain documentation of activities and resources used to support that a costanalysis has been performed to establish that costs and elements were determined to be fair and reasonable in accordance with Federal cost principles.All contract supporting documentation must be retained by the local agency in project files forthe required retention period. Unsupported costs may be disallowed and required to bereturned to Caltrans. Having proper documentation policy and procedures, trained staff and organized project files are essential for demonstrating that costs claimed and reimbursed havebeen incurred, are eligible, reasonable, allowable, and allocable to the contract and comply withFederal cost principles.Contracts below $150,000 are not subject to the Caltrans Financial Document Review but localagencies are required to establish that all costs are in compliance with the Federal cost principles, 48 CFR, Chapter 1, Part 31, and other applicable requirements are met. All documents listed above and cost analysis documents are required to be retained in the projectfiles to demonstrate compliance.

Instructions are provided in the Exhibit 10-A on the requirementsforsubmitting a complete Financial Review packet. Financial packets can be e-mailed to:
cPflQ!1nQcL.Alternatively, if you do not have Internet access, you can mail Financial Review packets to:

Department ofTransportationIndependent Office ofIndependent Office of Audits andInvestigations, MS 2 Attention:

External Audit Manager

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P.O. Box 942874 Sacramento, CA 94274-0001
Consultants’ Responsibilities (Both prime consultants and subconsultants) A&E prime consultants and subconsultants in contract with local agencies using state or federal-aid highway funds should refer to Exhibit 10-A and the 10-A Checklist for the ICRfinancial, documents required to be submitted to their local agency. Consultarts must completethe “Annual certification of Indirect Costs and Financial Management System” (Exhibit 10-K) that attests that the ICR rate proposed is in compliance with FAR (48 cFR, Chapter 1, Part 31)and that the consultant’s financial management system is adequate to accumulate andsegregate, reasonable, allowable, and allocable direct and indirect project costs. For all futurecontracts within a same fiscal. year, the consultant needs to only provide a copy of the Exhibit10-K to the Local Agency. The Exhibit 10-A and 10-K should be submitted to the local agency who will forward a copy to IOAI along with all other related and required financial documents. For guidance see Training Module for Financial Document Requirements for A&E Contracts with Local Agencies on lOAf’s website httpjJ cgLits (click onArchitectural & Engineering Contracts/A&E Contracts with Local Agencies/Training Modules).Consultants must follow all the federal, state, and contract requirements outlined above in the Section above, “Applicable Standards”. Each contracting consultant must ensure its ICR is not combined with any parent company’s or subsidiary’s ICR, ICR schedules for both prime consultants and sub-consultants should be prepared using the accrual basis of accounting and be presented in compliance with the Federal cost principles.

Figure 10-3 at the end of this chapter provides an example of a Standard Indirect Cost Rate Schedule that consultants can use when preparing their own.For public works Prevailing Wage contracts, all workers must be paid the prevailing wage rate determined by the Director of the Department of industrial Relations according to thetype of work and location of the project. ksPrevailing-Wage.htrnl. Prime and sub-consultants must include prevailing wagerate information in the cost proposal (see Exhibit 1O-H4for example, and provide a Prevailing Wage Rate Policy on company letterhead, signed and dated. The policy must document the accounting treatmentfor prevailing wage deltas and including the following information:
• Description of types of work that require payment of prevailing wage rates.• Explanation of how the firm pays prevailing wage deltas (e.g. pay directly to employee as single amount to cover delta base and delta fringe, pay delta base to employee and pay delta fringe amount to a third-party plan, etc.) • Accounting method used for prevailing wage delta base costs.• Accounting method used for prevailing wage delta fringe costs.

For guidance see Caltrans’ Prevailing Wage Interpretive Guidance and webinar on fOAl’s website w.cjqçaov / audits.When determined necessary, fOAl may request additional information, such as a labor distribution summary and Executive Compensation Analysis (ECA). A consultant’s labor distribution summary report is a labor expense report that detail all hours worked (paid andunpaid) for a fiscal year, wages earned, and benefits accrued by all the consultant’s employees.

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The labor summary reportshould include employee names, salaries, hourly rates, total hours worked segregated by direct hours, indirect hours, paid time off hours, arid uncompensated hours and amounts.

An ECA is an evaluation by the consultant to determine the allowability and reasonableness of executive compensation in compliance with Federal cost principles and the AASHTO Audit Guide that can be based on either the National Compensation Matrix or independentcompensation surveys.

Independent Office of Audits and Investigations’ Responsibilities After fOAl receives a consultant’s complete financial document packet (per Exhibit 10-A and Exhibit 10-A Checklist) from the local agency, fOAl will review the proposed ICR and supporting documents and notify local agencies in writing whether the proposed ICRs areaccepted or adjusted.Contracts will be executed after fOAl either accepts or adjusts the ICR and a revised final cost proposal (if applicable) is received. Correction of the final cost proposal, however, does NOT need to be cleared through Caltrans JOAI before executing the contract. An email notification from IOAI serves as documentation to support an accepted ICR.

Audits and Reviews to be PerformedAfter contract execution, a consultant’s IR may be subject to further detailed review or auditby IOAI based on certain risk factors. Costs that are determined to be unallowable as a result ofthe review or audit will be subject to repayment.

Indirect Cost Rate Audits
During an ICR audit, lOAf or an independent CPA will examine the consultant’s proposed ICR for a one-year accounting period to ensure that unallowable costs have been removed from theindirect costs, that allowable costs have been correctly measured and properly charged and allocated, and that the ICR has been developed in accordance with the Federal cost principles (as specified in 23 U.S.C. Section 112(b)(2) (B), 23 CFR Part 172.11,48 CFR Part 31 and other FAR and State requirements). As a result of the audit, the local agency will work with theconsultant to adjust the ICR based on audit recommendations.

For guidance regarding the existing policies and procedures set forth in the federal regulations, and acceptable ICR schedules, refer to the AASI ITO A.udit Guide, Chapter 5, and Figure 10-3 Standard Indirect Cost Rate Schedule in this Chapter. There is also a review program at Appendix A which serves as a guide for CPAs and fOAl when performing ICR audits and canalso be used as a resource for consultants when preparing for an ICR audit.CPA Workpaper Reviews During a workpaper review of a CPA audit of an ICR, lOAf will review the CPA’s audit workpapers to determine whether to issue a Cognizant Letter of Approval for the ICR. The CPA Workpaper Review determines whether: (a) the CPA’s audit of the ICR was conducted inaccordance with Generally Accepted Government Auditing Standards (GAGAS), (b) the CPA

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adequately considered the auditee’s compliance with the Federal cost principles and relatedfederal and state laws and regulations.

Chapter 11 of the AASHTO Audit Guide provides information to the CPA on the required audit disclosures.

IMPORTANT NOTE FOR CPAs: Contracts receiving state or federal funds are highlyscrutInized. Materiality levels tend to be lower and more testing is required. GAGAS providesthat auditors may find it appropriate to use lower materiality levels as compared with themateriality levels used in nonGAGAS audfts because of the public accountability of government entities and entities receiving government funding, various legal and regulatoryrequirements, and the visibility and sensitivity of government programs. The AASHTO Audit Guide should be used as a tool for performing audits and attestations of A&E firms.

Contract Audits
During a Contract Audit, auditors will review a consultant’s financial managementsystem and contract cost proposal to determine if:
• The consultants’ accounting system is adequate to accumulate and segregate costs;• Costs are reasonable, allowable, allocable and supported adequately;• The contract contains all required fiscal provisions; • Proper state and federal procurement requirements were followed.

Incurred Cost Audits
During an Incurred Cost Audit, auditors will review incurred contract costs to determine if:
• Cost data are maintained in an accounting system that adequately gathers, records, classifies, summarizes, and reports accurate and timely financial data for directandindirect project costs by account; • Costs are adequately supported, reasonable, allowable, and allocable;• Costs incurred are in compliance with state and federal laws and regulations; • Costs incurred are in compliance with the Master Agreement andSupplemental Agreement;
• Costs incurred are in compliance with the fiscal provisions stipulated inthe contract; and
• The terms required by the Master Agreement and federal laws and regulationsare in the contract.

Audit Findings and Review Deficiencies
If a consultant’s ICR is audited or reviewed, local agencies are responsible for ensuring allexecuted and future contracts reflect the audited and adjusted fiscal year ICR(s), Local agenciesshould request reimbursement from the consultant for overpayment on rates that wereadjusted down.

The local agencies may be subject to sanctions outlined in LAPM Chaptei 0DficiencIes and San ction if the state or federal government determines that any reimbursements to the

January 2019
FIRST AMENDMENT TO PR0FESSIONAL SERVICES AGREEMENT FOR

CITY OF AVALON AND ENGINEERED SOLUTIONS GROUP
This FIRST Amendment is made effective September 1, 2023 to the Professional Services Agreement by and between the City of Avalon (“City) and Engineered Solutions Group, a S-corporation (“Consultant”) dated the 8th day of January 2020.

The terms and conditions of the Agreement are amended as follows:

3.1.2 Term.

The term of this First Amendment shall be two (2) years commencing December 31, 2023 and ending on January 1, 2025.

3.3.1 Compensation.

Total compensation shall not exceed $800,000 of executed task orders per fiscal year, without written approval of the City Council or City Manager as applicable. Extra Work may be authorize, as set forth in Section 3.3.4, and if authorized, will be compensated at the rates and manner set forth in the Agreement.

Except as modified above, all terms and conditions of the Agreement shall remain in effect.

OF
AV}é
David M. Maistros
City Manager

ENGINEERED SOLUTIONS GROUP
By:

Michael Thomas, P.E.

Chief Executive Officer

CITY OF AVALON CITY COUNCIL
MEETING DATE: September 3, 2024 AGENDA ITEM: ________ ORIGINATING DEP: Finance CITY MANAGER: ttLk.

PREPARED BY: Matthew Baker, Finance Director
SUBJECT: Adoption of the Cruise Ship Wharfage Fee IncreaseRECOMMENDED ACTION(S): Introduce and waive all readings of an ordinance repealing andreplacing chapter 10-2.402(b) of the Avalon Municipal Code, use fees for harbor cruise ship passengers, and adoption of findings under the California Environmental Quality Act.

REPORT SUMMARY: At the June 4, 2024 City Council Meeting, City Staff recommendedincreasing the cruise ship wharfage rate to $7.00 per passenger beginning July 1, 2025. City Council provided City Staff with direction tobring back an ordinance with the proposed increase to the cruise ship wharfage rate supported by a rate analysis. City Staff prepared an analysis of its operations to determine the per passenger cruise ship wharfage fee that would adequatelyreimburse the City’s Harbor Fund on a cost-based and proportional basis. A copy of this analysishas been included as an attachment to this report.

As a result of the analysis, City Staff determined that the current cruise ship wharfage rate of $5.00 per passenger should be increased by $2.50 per passenger in order to recover cruise ship visitors’ share of capital expenditures in the harbor. The proposed increase would generate an additional $900 thousand annually to fund maintenance of existing facilities and capital improvements. Based on prior discussions with cruise operators, City Staff proposes implementing the wharfage increase effective January 1, 2026 to provide operators with adequate notice in consideration for existing bookings under the current rate.

As outlined in §10-2.402(b)(6), the City of Avalon currently provides an annual marketing incentive for cruise lines deploying a second ship to Catalina for 50 or more calls per year in an amount equal to 50% of the wharfage fees collected for the second ship. No cruise line has beeneligible for this incentive since 2019 and no cruise line will be eligible based on the currentapproved schedule of arrivals. As a result, the marketing incentive was not considered as partof the rate analysis and the incentive does not provide a proportional reimbursement of harboroperating and capital costs.

Effective January 1, 2026, City Staff is proposing to charge all cruise ships calling upon Avalon 100% of the manifest for cruise ship passengers, minus any crew, at the rate of $7.50 per passenger.

Effective thirty (30) days after the adoption of the ordinance, the City will no longer offer as amarketing incentive an amount equal to 50% of wharfage fees collected from a second ship from the same cruise line who calls upon Avalon fifty (50) calls or more a year.

City Staff further recommends conducting a review of use rates on a periodic basis to ensure the Harbor Fund is reimbursed by its users on a cost-based and proportional basis.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The Avalon Municipal Code will not be amended and cruise ship wharfage will remain at $5.00 per passenger.

FOLLOW UP ACTION: Second reading of the ordinance
ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.

ATTACHMENTS: Ordinance; Cruise Ship Wharfage Rate Analysis Memorandum dated August 28, 2024
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AVALON REPEALING AND REPLACING CHAPTER 10-2.402(B) OF THE AVALON MUNICIPAL CODE, USE FEES FOR

HARBOR CRUISE SHIP PASSENGERS, AND ADOPTION OF FINDINGS UNDER THE

CALIFORNIA ENVIRONMENTAL QUALITY ACT
WHEREAS, the City of Avalon (the “City”) funds a portion of the costs for operating and maintaining the harbor and harbor facilities on through use fees imposed upon passengers who disembark orreturn to the City through harbor facilities; and WHEREAS, currently, the costs ofoperating and maintaining the harbor and harbor facilities exceed the revenues generated by these fees; and
WHEREAS, certain capital projects need to be undertaken to properly maintain these harbor facilities; and
WHEREAS, all revenues collected in the Harbor Fund, including wharfage fees, are used solely for harbor operating and capital expenditures to ensure the continued safety and enjoyment ofthe harbor; and WHEREAS, in March 2017, the City Council amended the Avalon Municipal Code Section 10-2.402(b) to increase wharfage fees on cruise ship passengers over a five (5) year period to five dollars ($5.00) for each passenger so landed, discharged loaded or embarked on or after July 1, 2021; and WHEREAS, in March 2017, the City Council amended the Avalon Municipal Code Section 10-

2.402(b)(6) to provide an annual marketing incentive in consideration for a cruise line deploying a second ship to Avalon for fifty (50) or more calls per year equal to fifty percent (50%) of the wharfage fees collected for the second ship, payable quarterly, in arrears; and
WHEREAS, the City desires to eliminate the marketing incentive described in Avalon Municipal Code Section 1 0-2.402(b)(6); and
WHEREAS, the City desires to increase the wharfage fees on cruise ship arrivals to recoup more ofthe costs of operating and maintaining the harbor and harbor facilities on a cost-based and proportional basis.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF AVALON DOES ORDAIN AS FOLLOWS:

Section 1. Incorporation ofRecitals. The above recitals are true and correct and are incorporated herein by this reference.

Section 2. Section 10-2.402, subdivision (b), is repealed and replaced to read as follows:

As used in this subsection, “cruise ship” shall mean a vessel which lists Avalon as a port-of-call and which anchors so as to permit passengers to disembark and return to the same vessel. The fee of five A-I
dollars ($5.00) for each passenger shall be levied upon one hundred percent (100%) of the manifest passengers on a cruise ship, excluding persons employed upon the vessel. Commencing on Januaiy 1, 2026, the fee shall be increased as follows:
(1) Seven dollars and fifty cents ($7.50) for each passenger shall be levied upon one hundred percent (100%) ofthe manifest on a cruise ship, excluding persons employed upon the vessel, on or after January 1, 2026:

Section 3. The City Council hereby finds that the fees shall be used for covering the operating expenses ofthe harbor, to purchase supplies, equipment, and materials for the harbor and harbor facilities, to meet the City’s financial reserve needs and requirements, and to obtain funds necessary for capital projects in order to maintain services within the harbor. The City Council further finds that such fees are necessary andreasonable to fund the administration, operation, maintenance, and improvements ofthe harbor and harbor facilities. Based on these findings, the City Council hereby determines that this Ordinance is exempt from the requirements of CEQA pursuant to California Public Resources Code section 21 080(b)(8) and State CEQA Guidelines section 15273(a).Section 4. Severability. If any section, sentence, clause or phrase of this Ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications ofthis Ordinance which can be given effect without the invalid provision or application, and to this end the provisions ofthis Ordinance are severable. The City Council of the City of Avalon hereby declare that they would have adopted this Ordinance and each section, sentence, clause or phrase thereof, irrespective ofthe fact that any one or moresection, subsections, sentences, clauses, or phrases be declared invalid or unconstitutional.

Section 5. The City Council of the City of Avalon shall certify the passage and adoption of this ordinance and shall cause the same to be published and/or posted in the manner required by law.

INTRODUCED at a regular meeting of the City Council of the City of Avalon on the 3 day of September 2024, by the following vote:

AYES:

NAYS:

ABSENT:ABSTAIN:

A-2
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Avalon on this 20111 day of September 2024, by the following vote.

AYES:

NAYS:

ABSENT:ABSTAIN:

Ann H. Marshall, Mayor
Attest:

Gabrielle Morones, City Clerk
APPROVED AS TO FORM:

Scott Campbell
Best Best & Krieger, LLP
A-3

CITY OF AVALON MEMORANDUM
File
FROM: Matthew Baker, Finance Director
SUBJECT: Cruise Ship Wharfage Rate Analysis
DATE: August 30, 2024
Summary: The current cruise ship wharfage fee of $5.00 per passenger is sufficient to cover the proportionate share of harbor operating costs; however, costs associated withcapital maintenance and capital improvements are not being recovered under the current rate. A proposed rate increase of $2.50 per passenger would be required in order to fullyrecover the costs associated with capital maintenance and scheduled capitalimprovements in the harbor.

Background: At the June 4, 2024 City Council Meeting, City Staff recommended increasing the cruise ship passenger rate to $7.00 per passenger beginning July 1, 2025.

City Council provided City Staff with direction to bring back an ordinance with the proposedincrease supported by a rate analysis. The purpose of this memorandum is to document the justification for the proposed increase to the City’s cruise ship wharfage fee in order to adequately reimburse the City’s Harbor Fund on a cost-based and proportional basis.

The Harbor Fund is an enterprise fund and the costs associated with harbor operations and the maintenance of harbor infrastructure should be recouped through various chargeson users of harbor facilities. The cost to operate the harbor increases annually and revenues need to grow to cover these increased costs. The majority of harbor revenuesare collected from wharfage fees which are charged to cross-channel and cruise shipoperators on a per passenger basis. Unlike other harbor use fees that are assessed as a percentage of the operator’s gross receipts or are subject to annual increases through themiscellaneous fee schedule (e.g. nightly mooring rates), wharfage fees have not been scheduled to increase annually in recent years, requiring annual increases in the numberof passengers in order to grow the revenues necessary to recoup the annual increased operating costs.On February 7, 2017, the City Council adopted Ordinance No. 1153-17 which modified the wharfage collected from cruise ship passengers to recoup the costs of operating and maintaining the harbor and harbor facilities. Most notably, the ordinance increased theapplication of the wharfage fee from 80 to 100 percent of the cruise ship manifest, minusany crew members. The ordinance also established a tiered increase of the wharfage rate from $3.00 in FY 2018 to $5.00 in 2021. Lastly, the ordinance modified a marketing incentive for cruise lines deploying a second ship to Catalina for 50 or more calls per year.

TO:

The last scheduled wharfage increase on cruise ship visitors went into effect on July 1, 2021.1
The Harbor Fund uses three different sub-funds to account for harbor activity. Fund 103 is utilized to track expenditures related to operations, including Harbor Patrol, contractedlifeguard services, shoreboat services, waterfront trash collection and cleaning of restroom and shower facilities. Fund 104 is utilized to account for capital maintenance, includingannual maintenance and repairs of harbor infrastructure, and capital improvement projectsalong the waterfront. Fund 114 is utilized to account for the maintenance of the Fuel Dock facilities.

Revenue Requirement (Fund 103): For the current fiscal year ending June 30, 2025, theHarbor operating fund (Fund 103) has an operating budget of $7,764,289. Operating expenditures have increased by 11.0%, 8.5% and 7.0% respectively over the last three fiscal years requiring annual increases in revenues to offset these increased operating costs. The cruise ship wharfage rate of $5.00 per passenger has remained unchangedover this period with 100% of the revenues collected recorded to Fund 103 to recoveroperating expenditures. Increased ship capacity and occupancy rates have contributed toincreased cruise ship wharfage revenues over this period; however, passenger counts are anticipated to plateau near current levels without additional arrivals or further increases inship capacity.

The table below summarizes the operating expenditures and cruise ship activity within the Harbor Fund over the last four fiscal years:

Harbor Fund FY22 FY23 FY24 FY25
Operating Budget $6,026,989 $6,688,541 $7,254,099 $7,764,289 Per Passenger Rate $5.00 $5.00 $5.00 $5.00
CruiseArrivals 83 107 116 112Cruise Passengers 133,665 314,123 363,442 360,518 Average per Arrival 1,610 3,035 3,133 3,219
Cruise Ship Wharfage Rev. $662,350 $1,570,615 $1,767,270 $1,802,590 Users would need to contribute $7.76 million in revenue to offset the costs of operating the Harbor. The next section identifies the cruise ship visitor’s share of theses operating costs.1 In November 2020, the citizens of Avalon voted to adopt Measure H, a special tax which further increased the per passenger fee on cruise ship visitors by an additional $2.00 for the construction of a new hospitalfacility. The revenue impacts from this special tax were not considered as part of this review into the adequacy of cruise ship wharfage rates as the revenues generated are not used to fund harbor operations. 2 Proportionality (Fund 103): The City considered the proportionality of the cruise ship visitor’s impact on harbor operations relative to its residents, cross channel visitors, and mooring users utilizing the best data that it has available; however, certain assumptions were required given the limited availability of data regarding harbor usage by user type.

City Staff also utilized visitor statistics from Love Catalina and the Economic & Fiscal Impacts and Profile of 2016 Catalina Island Visitors Report (2016 Visitor Profile Report) to assess the impact of cruise ship visitors relative to other visitors.Cruise ships are generally scheduled to arrive midweek on days of the week that are less frequented by other harbor users and these visitors account for a significant majority ofthe harbor users on the days that they arrive in the harbor. All cruise ship visitors are considered day visitors and are on island for an average of 4.58 hours per visit. Whereas,day visitors account for 65% of all other visitor activity and are on island 7.34 hours per visit. While cruise ship visitors are on-island 1.5 fewer hours on average, the impact on harbor facilities was considered comparable to other day visitors for purposes of this analysis. The City assumed cruise visitors are more likely to utilize public facilities (e.g. beach, public restrooms) given their decreased spending at restaurants and for other activities. The remaining 35% of other visitors are overnight visitors and stay an averageof 2.26 nights per stay.

For the fiscal year ended June 30, 2024, cruise ships arrived 116 days out of the year (31 .8%). Cruise ship visitors, totaling 363,442 in the prior fiscal year, accounted for an estimated 32.6% of the number of visitors during the fiscal year. Cruise ship visitors visitfor one day; whereas, other visitors include visitors that may stay multipie nights. After factoring for overnight stays, cruise ship visitors represent 25.1% of the visitor population on a per day basis.

Number of Cruise Ship Visitors 363,442 32.6%Number of Day Trip Visitors (non-Cruise) 489,107 43.8% Number of Overnight Visitors 263,365 23.6%
Total Number of Visitors 1,115,914 100.0%
Number of Cruise Ship Visitors 363,442 25.1%Number of Day Trip Visitors (non-Cruise) 489,107 33.8%Number of Overnight Visitors (weighted for nights stayed x 595,205 41.1% Total Number of Visitors (weighted for nights stayed) 1,447,754 100.0% Given the limitations in data available documenting harbor activity by user type, 25.1% represents a reasonable estimate of the cruise ship visitor’s share of the harbor’s operating costs. This would total $1 ,948,837 based on the current year’s operating budget.

The next section establishes the per passenger rate required to recoup cruise ship visitor’s share of the harbor’s operating budget.

Rate Design (Fund 103): Harbor operations are funded through the various revenue sources directly charged to cross channel visitors and cruise ship visitors as wharfage, nightly and annual mooring charges, and through various rents and use fees charged bybusinesses operating in the harbor based on a percentage of their gross receipts. In order 3 to determine the per passenger amount to be charged to cruise ship visitors to recoup their $1.95 million share of the Harbor’s operating budget, City Staff first needed to calculate cruise ship visitor contributions to these other harbor revenues.

While cruise ship visitors account for 25.1% of visitors on a per night basis, their spending patterns are different from other day visitors requiring adjustments to their share ofrevenue contributions. For example, the average cruise ship visitor spends 34.3% asmuch on meals and snacks compared to a non-cruise ship day visitor. Similarly, the average cruise ship visitor spends 40.8% as much on ticketed activities compared to other visitors based on the 2016 Visitor Profile Report. After factoring for this difference in spending patterns, cruise ship visitors contribute an estimated 12.6% of pier and tideland rental revenues and 13.7% of admission tax and use fee revenues for a total of $164,375.

The percentage for pier and tideland rentals was determined based on an average of meal and activity spend for pier considering both restaurants and ticketed activities contribute to this revenue. The percentage for harbor use fees and admission tax was based on cruise ship visitor’s proportional share of spending on activities.

The table below summarizes the various Harbor revenues based on the current year budget and the estimated contributions from cruise ship visitors:

FY25 %Spend Revenue Account Cruise Amount Budget Visitors Wharfage Fee — Cross Channel 10325-8530 2,375,000 0% -
Nightly Moorings 10325-8545 1,925,000 0% -Pier and Tideland Rentals 10325-8555 625,000 12.6% 78,750Harbor Use Fees 10325-8525 425,000 13.7% 58,225 Annual Mooring Permits 10325-8535 255,000 0.0% -Admission Tax 10325-7025 200,000 13.7% 27,400 Mooring Transfer Fees 10325-8540 150,000 0.0% -
Other Various 30,000 0.0% -
Total $5,985,000 $164,375
Cruise ship visitors contribute an estimated $164,375 to other harbor revenues. Afterapplying this as a credit to the cruise ship visitor’s share of harbor operating costs, cruiseship visitors would still need to contribute $1 ,784,462 or $4.91 per passenger. While thecurrent rate of $5.00 per passenger is sufficient to cover the cruise ship visitors currentshare of the harbor’s operating costs, the rate needs to be reviewed on a periodic basis to account for future increased operating expenditures or changes to the estimated number of cruise ship visitors. Further, the current rate does not provide any contribution for the cruise ship passenger’s share of capital maintenance costs or capital improvements in the harbor.Revenue Requirement (Fund 104): For the current fiscal year ending June 30, 2025, the Harbor capital fund (Fund 104) has a capital maintenance budget of $661,650 and a capital improvement budget of $3,743,357 net of grant revenues. Capital maintenance includes maintenance of premises, annual maintenance of shower and restroom facilities, 4 float maintenance and storage, and maintenance activities related to storm damage. A portion of the Harbor Master and Public Works Director’s time is also allocated to this fund to account for their management of the capital program. Similar to harbor operating costs,the City needs to determine the cruise ship visitor’s proportional share of these costs.

Proportionality (Fund 104): The City separated capital maintenance expenditures from expenditures in the capital improvement program in order to determine the cruise shipvisitor’s proportional share of this fund’s expenditures. For capital maintenanceexpenditures, the City applied the cruise ship visitor’s 25.1% share of visitor population ona per day basis similar to other operating expenditures for a total of $166,074 to be recovered from cruise ship visitors to cover these costs.For expenditures in the capital budget, the City reviewed the budgeted projects in the current year to determine the level of benefit received by cruise ship visitors on a perproject basis. Cruise ship visitors benefit directly from certain projects (e.g. Green Pier Improvements) and indirectly from other projects (e.g. Fuel Dock improvements). All projects in the harbor improve operations and at least indirectly benefit cruise ship visitors.For projects that directly benefit cruise ship visitors, the City applied the 25.1% allocation and the City applied a 10% allocation to all other projects. While the specific project list will vary year-over year, the analysis assumes the current year’s budget is a reasonable representation of annual harbor capital activity.

The table below summarizes the current year’s capital projects and the cruise ship visitors’ proportional share of capital budget:

Project Budget Allocation to Amount __________Cruise Visitors Vehicle Replacement 190,666 10.0% 19,067
Boat Trailer 20,000 10.0% 2,000Float Rehabilitation 200,000 25.1% 50,200Float Construction — Float 6 10,000 10.0% 1,000 Clubdock / Dinghy Dock Floats 10,000 10.0% 1,000
Crescent Front Street Improvements 150,000 25.1% 37,650Clubdock Pier Replacement 200,000 10.0% 20,000Green Pier Restrooms 100,000 25.1% 25,100Green Pier Repairs and Decking 1,050,000 25.1% 263,550South Beach Sea Wall 200,000 25.1% 50,200 Float Ramps 25,000 10.0% 2,500Harbor Master Building Upgrades 100,000 25.1% 25,100 Anchor Chains 20,000 10.0% 2,000
Security Camera Upgrades 40,000 25.1% 10,040Casino Way Improvements 150,000 25.1% 37,650 Fuel Dock Rehabilitation 50,000 10.0% 5,000
Cabrillo Mole Ferry Terminal Phase II 1,231,111 10.0% 123,111 Total $3,743,357 $675,168
5 Cruise ship visitors proportional share of harbor expenditures related to capital maintenance and capital projects total $841,242. The next section establishes the perpassenger rate required to recoup cruise ship visitor’s share of the harbor’s capital budget.Rate Design (Fund 104): Capital expenditures were presented net of any grant revenues.

A portion of cross channel wharfage is assigned to fund harbor capital activity; however, there are no existing revenues paid directly or indirectly by cruise visitors to fund capital activity. Based on the current number of 363,442 cruise ship visitors, the per passenger wharfage fee would need to increase by at least $2.31 per passenger to cover their proportional share of these capital costs.

Conclusion: The current cruise ship wharfage rate of $5.00 per passenger is sufficient tocover their proportional share of operating costs; however, cruise ship wharfage needs to be increased by $2.50 per passenger, rounding up to the nearest $0.25, to cover cruise ship visitors’ proportional share of capital expenditures. The proposed $7.50 wharfage ratealso needs to be reassessed on a periodic basis to account for increases in annual budgeted expenditures and changes in visitor levels.
6 CITY OF AVALON CITY COUNCIL
MEETING DATE: September 3, 2024 AGENDA ITEM: 10
ORIGINATING DEP: Finance CITY MANAGER: _______ PREPARED BY: Matthew Baker, Finance Director SUBJECT: Cruise Ship Annual Report for the fiscal year ended June 30, 2024 RECOMMENDED ACTION(S): Receive and file the Cruise Ship Annual Report for the fiscal year ended June 30, 2024; Adopt a resolution re-establishing the guidelines for cruise ships asoutlined in the prior Resolution No. 22-55.

REPORT SUMMARY: On December 20, 2022, the City Council adopted No. 22-55 re establishing the guidelines for the approval of cruise ships visiting Avalon through December 31, 2024. The guidelines established a framework by which cruise ships would be approved to visit Avalon as a port of call. Per Resolution No. 22-55:

1. Number of regularly scheduled cruise ship vessels shall not exceed 3 per week during the Summer Season (Memorial Day to Labor Day) without final written approval of the City Manager.

2. No cruise ship vessels shall be allowed on the weekends during the Summer Season (Memorial Day to Labor Day) or during special event weekends — such asJazz Traxx —without final written approval of the City Manager.

3. Number of regularly scheduled cruise ship vessels shall not exceed 3 per week during the “Off Season” (Labor Day to Memorial Day) without final written approvalof the City Manager.

4. Repositioning, infrequent, or small cruise ship vessels (1,000 passengers or less) may be considered for visitation by the Harbor Master, taking into account the day requested, holidays, event(s), harbor activity(ies), impacts to public safety, etc.

The resolution further requires the Harbor Master and Finance Director to provide an annual report on cruise ship vessels that includes the number of vessels that visit Avalon, number ofpassengers, amount of wharfage collected, any safety or security incidents that may have occurred while the ship was in port, as well as projections and scheduling information for the next year. The annual report was previously presented on a calendar year basis but has been revised to report on a fiscal year basis to align with other City financial reporting. At the time the annual report is provided to the City Council, the Council has the opportunity to re establish/redefine the guidelines.

Fiscal Year (FY) 2023-24 Cruise Ship Financial Results and FY 2024-25 Outlook Please see below for a summary of cruise ship activity for the fiscal year ended June 30, 2024:

Month # of Vessels Number of Occupancy Wharfage Measure H Arrived Passengers % Revenue Revenue
July2023 7 27,654 125.2% $138,270 $27,654August 2023 7 26,942 119.9% 1 32,460 26,492 September2023 10 29,211 108.1% 146,055 29,211October2023 14 37,668 105.1% 188,340 37,668 November2023 14 35,263 104.9% 176,315 35,263December2023 10 35,030 119.5% 175,150 35,030 January2024 7 20,808 108.6% 104,040 20,808
February2o24 5 14,746 104.9% 73,730 14,746March 2024 8 24,833 113.7% 124,165 24,833 April 2024 16 40,118 109.3% 200,590 80,236
May2024 10 34,692 111.7% 173,460 69,384
June2024 9 36,927 113.2% 184,635 73,854Total 117 363,892 111.7% $1,817,210 $475,179 For all cruise ships, the City of Avalon currently charges a $5.00 per passenger harbor wharlage fee for the use of harbor facilities, levied upon 100% of the manifest passengers, excluding persons employed on the vessel. On November 3, 2020, Avalon residents approved Measure H authorizing an additional tax on cruise ship, ferry, and aircraft passengers to fund the Catalina Island Medical Center. Beginning in April 2022, the City started collecting an additional $0.50 per passenger fee from cruise ships. The Measure H tax increased to $1 .00 per passenger beginning in April 2023 and increased to $2.00 per passenger in April 2024.

There are no further increases to the tax scheduled.

Passenger counts are reported to the Harbor Department upon arrival to the harbor by the cruise operator. Ship occupancy rates are determined by comparing the reported manifest passengers to the ship’s published passenger capacity, which generally assumes all cabins at double occupancy, and may exceed 100% occupancy as a result of three or more passengers sharing a cabin.

Over the past ten fiscal years, the number of cruise ship arrivals has remained fairly consistent, ranging from 110 arrivals in FY2015-16 to 117 in FY2023-24. However, theaverage number of passengers has increased from an average of 2,400 passengers per arrival pre-pandemic to 3,133 passengers in FY2023-24. This increase is attributable to changes in the cruise industry towards larger vessels arriving in Avalon with ten (10) arrivals in FY2023-24 exceeding 4,000 passengers. Below please find a comparison of the number of arrivals andaverage occupancy over the past ten fiscal years.

Cruise Ship Arrivals - Last 10 Fiscal Years
In March 2017, the City amended the municipal code to increase wharfage fees from $2.50 per passenger to $5.00 per passenger over five fiscal years through annual $0.50 per passengerincreases. While the COVID-19 pandemic resulted in a suspension of cruise ship arrivals from March 2020 through September 2021, the cruise ship wharfage fees continued to increase as scheduled. Below please find a comparison of cruise ship wharfage revenues by fiscal year,and as a percentage of the Harbor’s total operating revenues.

Cruise Ship Revenues - Last 10 Fiscal Years
$2.0 25%$1.8$1.6$1.4
$1.2
$1.0
$0.8 _____ $0.6$0.4
$0.2
Cruise ship revenues now account for approximately 22% of Harbor operating revenues (Fund 103). As a result of scheduled rate increases and increased occupancy, cruise ship wharfage 140 3,500
120 3,000100 2,500
80 2,00060 1,50040 1,000
20 500
0 9,
Afl’ of,” 9,
Number of Arrivals -=Number of Passengers
1 viC
C
20%
(0
C,,
9,
15%
10%
5%
>7
0%
0)
9,
Wharfage Revenue of Harbor Operating Revenues
is the fastest growing revenue and accounts for the majority of revenue growth in the Harbor Fund. In addition to the wharfage revenues generated, cruise ship passengers account for approximately one third of all visitors to the City and contribute an estimated $20 million of taxable sales activity for businesses located in the City.1 Based on the 112 arrivals scheduled in the current fiscal year, assuming the approval of 2025 arrivals and 100% occupancy rates, cruise ship wharfage revenues are estimated at$1 ,987,265 in the current fiscal year. Cruise ships will also generate an additional $794,906 in Measure H tax collections for the fiscal year.

Operator Cruise Line Cruise Ship Passenger FY23- FY24-
Capacity 24 25
Carnival Corporation Carnival Cruise Line Radiance 2,984 50 38 Miracle 2,141 12 0
Firenze 5,260 3 17
Holland America Line MS Koningsdam 2,650 1 3
MS Zaandam 1,432 1 1MS Noordam 1,916 1 0MSEurodam 2,104 1 0 Princess Cruises Sapphire Princess 2,670 1 0
Discovery Princess 3,660 1 4
Seabourn Cruise Line Sojourn 458 1 0
Royal Caribbean Group Royal Caribbean mt. Navigator of the Seas 3,386 23 31 Radiance of the Seas 2,466 0 1Brilliance of the Seas 2,543 0 1 Celebrity Cruises Celebrity Eclipse 2,852 3 0
The Walt Disney Company Disney Cruise Line Disney Wonder 2,400 10 11 Disney Magic 2,700 2 0
Norwegian Cruise Line Norwegian Cruise Line Norwegian Sun 1,936 1 0 Oceania Cruises MS Regatta 824 1 0
Lindblad Expeditions National Geographic Quest 100 2 0
Venture 100 3 3
Villa Vie Residences Villa Vie Odyssey 929 0 1
ROW Management, Ltd. The World 200 0 1
Total 117 112
With a passenger capacity of 4,126, Carnival Cruise Lines’ Firenze is the largest ship to visitthe City. The Firenze made its inaugural visit to Avalon on May 13, 2024. Working cooperatively with Love Catalina, Avalon Harbor Department has managed the influx of passengers disembarking/embarking to and from the cruise ship efficiently and effectively. To date, the City has been visited by the Firenze five times, with two more visits scheduled in December 2024. Carnival Cruise Lines has requested to increase the Firenze schedule in Avalon through 2026. To date, no complaints have been received from the general public 1 Estimate assumes 60% of manifest passengers disembarking and spending of $66.39 per disembarking passenger based on Chamber’s 2017 Economic and Fiscal Impacts Survey and adjusted for inflation. regarding passengers from the Firenze. The Harbor Department has not reporting any significant safety or security issues related to this particular cruise ship.Safety or Security Incidents During the annual port facility inspection by the United States Coast Guard in July 2023, it was noted as an observation that there were long lines of cruise ship passengers waiting to return to the cruise vessel. The City worked closely with cruise ship and tendering operations to address the process inefficiencies which contributed to the longer lines and has since resolved the issue to the Coast Guard’s satisfaction. There were no other safety or security incidents to report in the fiscal year ended June 30, 2024.

FISCAL IMPACTS: Contingent on City Council direction.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: N/A
FOLLOW UP ACTION: Implement City Council direction.

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

ATTACHMENTS: Resolution
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AVALON

ESTABLISHING GUIDELINES FOR THE APPROVAL OF CRUISE SHIPS TO VISIT AVALON FOR 2025-2027
WHEREAS, the City of Avalon is a premier island destination for cruise ship vessels in Southern California; and
WHEREAS, the City of Avalon receives cruise ship passengers at facilities publically owned and operated; and
WHEREAS, cruise ship vessels and passengers, respectively, pay wharfage fees, and other taxes and fees as applicable to the City of Avalon; and WHEREAS, the City of Avalon wishes to establish by resolution guidelines for the approval process required by cruise ships wishing to visit Avalon; and WHEREAS, the City of Avalon City Council will review and reapprove the established guidelines every two years.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AVALON:

1. Number of regularly scheduled cruise ship vessels shall not exceed 3 per week during the Summer Season (Memorial Day to Labor Day) without final writtenapproval of the City Manager.

2. No cruise ship vessels shall be allowed on the weekends during the Summer Season (Memorial Day to Labor Day) or during special event weekends — such as Jazz Traxx —without final written approval of the City Manager.

3. Number of regularly scheduled cruise ship vessels shall not exceed 3 per week during the “Off Season” (Labor Day to Memorial Day) without final written approval of the City Manager.

4. Repositioning, infrequent, or small cruise ship vessels (1,000 passengers or less) may be considered for visitation by the Harbor Master, taking into account the day requested, holidays, event(s), harbor activity(ies), impacts to public safety, etc.

5. The Harbor Master and Finance Director will provide an annual report on cruise ship vessels that includes the number of vessels that visit Avalon, number of passengers, amount of wharfage collected, any safety or security incidents thatmay have occurred while the ship was in port, as well as projections and scheduling information for the next year.

6. Guidelines shall be reviewed and re-established by a City Council adopted resolution based on the findings of the annual reports.

PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Avalon this 3rd day of September, 2024, by the following vote:

AYES:

NOES:

ABSTAIN:ABSENT:

Ann H. Marshall, Mayor
City of Avalon, California
ATTEST:

Gabrielle Morones, City ClerkCity of Avalon, California

CITY OF AVALON CITY COUNCIL
MEETING DATE: September 3, 2024 ADENDA ITEM: I 1
ORIGINATING DEP: Administration CITY MANAGER: N1\A.

PREPARED BY: David Maistros, City Manager
SUBJECT: Sidewalk Vendor Ordinance Discussion
RECOMMENDED ACTION(S): Discuss and provide direction to Staff.

REPORT SUMMARY: In 2019, over a series of 7 regular meetings of the City Council, the City Council developed Chapter 21 of Title 5 of the Avalon Municipal Code (AMC), establishing the regulations governing operations of sidewalk vendors within the City of Avalon. This ordinance came in response to Senate Bill 946 which was signed into law by Governor Jerry Brown in September 2018.

SB 946 forbids cities from prohibiting sidewalk vendors but provides cities local authority to restrict sidewalk vending to prevent undue concentration of commercial activity thatunreasonably interferes with the scenic and natural character of an area, protect the public’suse and enjoyment of natural resources and recreational opportunities, as well as allowsregulations directly related to objective public health, safety or welfare concerns.

Due to the City of Avalon’s unique characteristics and very limited public space, the adopted ordinance attempted to establish parameters to allow for successful sidewalk vending whileprotecting the quality of life of City residents and its visitors.Specifically, the ordinance establishes:
- A maximum of six vendors — three food vendors and three retail/merchandise vendors; - No vending within 20 feet of the entrance way to any building, store, theater, movie house, house of worship, or place of public assembly;
- Vendors must not set up within 50 feet of each other;- No vending shall occur within 10 feet of a bus stop or other site amenities such as benches, picnic tables, water fountains and/or bike racks; - No stationary vending in residential zones;- Parameters for operations in City parks; - Prohibition of sidewalk vending at high traffic and public recreational areas including:
o Cabrillo Mole,o Crescent Avenue from the Cabrillo Mole to the Casino and any adjacent walkways,
o Any public property that does not meet the definition of a sidewalk or pathway including, but not limited to an alley, intra-block, walkway, beaches, streets, street ends or parking lots, and
o Joe Machado Field.

The ordinance established by the City is well within the local authority established by SB 946, is valid, and defensible in a court of law.

The Community Services Department manages the sidewalk vending program and maintains a waitlist for interested permit holders. At the time this report was authored all six sidewalkvending licenses permitted by the AMC have been issued. Currently, there is one, active pre packaged food vendor, four merchandise vendors, and one vendor working toward food licensing. There are 12 vending permit applications on the waitlist.

The City Council and the City Manager have been contacted by a sidewalk vendor interested in expanding the scope of the sidewalk vending ordinance to allow for vending along Crescent Avenue. Specifically, the vendor request the following:

1. Expansion of the current locations for sidewalk vending by amending Chapter 5-21.04, Prohibited Locations. Locations requested by vendor include on, or adjacent to, the pedestrian walkway near the Wet Spot, the basketball Court, Photo Booth, stand uppaddle board rack, base of the Green Pier, next to the Wrigley Stage, by “old taxi stand,” by Sailors Delight, and City property at the Casino.

2. Removal of the six vendor cap and allow an unlimited number of permitted vendors.

3. Streamline the permitting process to make it more “efficient and accessible.” It is within the City Council’s purview to review the existing sidewalk vending ordinance and provide direction to Staff if an amendment is desired.FISCAL IMPACTS: Not applicable.

CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: Undetermined.

FOLLOW UP ACTION: Implement City Council direction.

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

ATTACHMENT: Chapter 5-21 of the Avalon Municipal Code.

City of Avalon, CA
Wednesday, August 28. 2024
Chapter 5-21. Sidewalk Vending
§ 5-21.01. Purpose and Findings.
[6-4-2019 by Ord. No. 1175-19, effective 7-4-2019]
(a) Purpose. The City finds that the vending of prepared or prepackaged foods, goods, and/or wares at semipermanent locations on public sidewalks and rights-of-way may pose unsafe conditions and special dangers to the public health,safety, and welfare of residents and visitors. The purpose of this chapter is to implement regulations on both roaming and stationary sidewalk vending that protect the public health, safety, and welfare of the community while complying with the requirements of general state law, as amended from time to time, to promote safe vending practices, prevent safety, traffic, and health hazards, and preserve the public peace, safety, and welfare of the community. (b) Findings.
(1) The City Council hereby finds that limitations on sidewalk vending are necessary to:
a. Comply with state legislation;
b. Promote the health, safety, and welfare;c. Ensure that the goals and policies of the City’s General Plan are upheld; d. Ensure that the flow of pedestrian or vehicular traffic including ingress into, or egress from, any residence, public building, or place of business, or from the street to the sidewalk, by persons exiting or entering parked or standing vehicles is maintained;
e. Provide reasonable access for the use and maintenance of sidewalks, pathways, hydrants, restrooms, trash receptacles, firefighting apparatus, as well as access to locations used for public transportation services; f. Protect the quality of life of City residents and minimize disruptions to the quiet enjoyment of residential property by restricting noise-making devices associated with sidewalk vending; g. Ensure no interference to the performance of police, firefighter, emergency, and other medical personnel services;
h. Maximize public access in the commercial districts and along the coast; and i. Reduce exposure to the City for personal injury or property damage claims and litigation. (2) The City Council hereby finds that the following unique characteristics of the City require certain restrictions on sidewalk vending:
a. Approximately one million visitors travel to the City every year to enjoy the scenic views along Crescent Avenue of the harbor, pier, and beaches.
b. The vast majority of visitors to the City arrive via cross-channel carriers at the Mole structure. The Mole is under need of immediate repairs and eventual replacement and portions of it are off limits to the public due to hazards created by conditions of the infrastructure. Due to this, the areas that cross-channel carrier passengers must line up to get on the cross-channel carriers are limited, adding to the congestion of this area. c. The Green Pleasure Pier is a narrow pier that provides unique views of the harbor, the City, and the mountains surrounding the City. Because of this unique location, the Green Pleasure Pier is already congested. Allowing sidewalk vendors on the Green Pleasure Pier would worsen the congestion and create additional health, safety, and welfare concerns and pose hazards to those on the Green Pleasure Pier. d. The City is less than three square miles, with the majority of business or visitors services on or near Crescent Avenue.
e. The beach and immediately adjacent walkways are very narrow and congested, with visitors often struggling to find space for their towels, chairs, and other equipment. During the summer, many people reserve spaces on the beach by placing their towels and beach equipment on the beach. § 5-21.02. Definitions.
[6-4-2019 by Ord. No. 1175-19, effective 7-4-201 9]
For purposes of this chapter, the following definitions apply:

CERTIFIED FAMERS MARKET
A location operated in accordance with Chapter 10.5 (commencing with Section 47000) of Division 17 of the Food andAgricultural Code and any regulations adopted pursuant to that chapter.

CITY
The City of Avalon.

PARK
A public park owned by the City, except the Joe Machado Field.

ROAMING SIDEWALK VENDOR OR VENDING
A sidewalk vendor who moves from place to place and stops only to complete a transaction.

SIDEWALK VENDOR OR VENDING
A person who sells, offers to sell, operates, engages in, or carries on a food or merchandise vending business from a pushcart, stand, display, pedal-driven cart, wagon, showcase, rack, or other nonmotorized conveyance, or from ones person, upon a public sidewalk, property, or other pedestrian path.

SPECIAL EVENT PERMIT
An event for which a special event permit has been granted pursuant to Chapter 6 of Title 4 of the Avalon Municipal Code.

SWAP MEET
A location operated in accordance with Article 6 (commencing with Section 21660) of Chapter 9 of Division 8 of the Business and Professions Code, and any regulations adopted pursuant to that article. § 5-21.03. Permits Required.
[6-4-2019 by Ord. No. 1175-19, effective 7-4-2019]
(a) No person, either for themselves or any other person, shall engage in any sidewalk vendor activities within the City without first applying for and receiving a permit from the Community Services Department. No more than six permits shall be issued and active at one time. (b) All sidewalk vendors shall obtain a sidewalk vending permit from the City’s Community Services Department prior to engaging in any sidewalk vending activities by submitting an application for a permit and being approved for such permit. The following information shall be required in the application:
(1) Name, current mailing address, and phone number of the vendor; (2) If the vendor is an agent of an individual, company, partnership, or corporation, the name and business address of the principal;
(3) The name, address and telephone number of all persons that will be employed by the permittee as a sidewalk vendor. If an employee is hired after any permit is issued, the name, address and telephone number of that employee will be provided prior to that person’s commencement of work; (4) A description of the merchandise/goods to be offered for sale or exchange, and the days/hours of sales; (5) A copy of the California seller’s permit with the sales tax number issued by the California Department of Tax and Fee Administration to the vendor; (6) A copy of the vendor’s social security card with the number; or a copy of the valid California driver’s license issued to the vendor; or a copy of the individual taxpayer identification number issued to the vendor; or a municipal identification number. a. Any such identification number(s) or license(s) collected shall not be available to the public for inspection and shall remain confidential and not be disclosed except as required to administer the permit or licensure program or comply with a state law or state or federal court order; (7) If preparing or selling food, a copy of the Los Angeles County Department of Public Health permit issued to the vendor; (8) If the vendor proposes to be a sidewalk vendor, a description or site plan map of the proposed location(s) where vending will take place, showing that the sidewalk location maintains a minimum of 48 inches of accessible route area, exclusive of the top of the curb, without obstruction, along the public sidewalk or public right-of-way, incompliance with the Americans with Disabilities Act and that no obstruction shall be located in a sidewalk or public right-of-way less than six feet in width when the sidewalk is adjacent to the curb; (9) A copy of general liability policy naming the City as additional insured in the amount of $1,000,000; (10) A certification by the vendor that to his or her knowledge and belief, the information contained in the application is true;
(11) A City of Avalon business license;(12) A copy of a valid mobile food permit issued by the Los Angeles County Department of Public Health, as required or, if not, a certification that such a permit will be obtained within a year of applying for a sidewalk vending permit; (13)A written acknowledgment by the vendor that the vendor agrees to comply with all the provisions of this chapter and all applicable provisions of the City ofAvalon Municipal Code; (14) A description and/or image of any pushcart, stand, display, pedal-driven cart, wagon, showcase, rack, or other nonmotorized conveyance the vendor proposes using; and
(15) An agreement by the sidewalk vendor to defend, indemnify, release, and hold harmless the City, its City Council, boards, commissions, officers and employees from and against any and all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, withoutlimitation, attorney’s fees, disbursements and court costs) of every kind and nature whatsoever which may arisefrom or in any manner relate (directly or indirectly) to the permit or the vendor’s sidewalk vending activities. This indemnification shall include, but not be limited to, damages awarded against the City, if any, costs of suit, attorneys’ fees, and other expenses incurred in connection with such claim, action, or proceeding whether incurred by the permittee, City, and/or the parties initiating or bringing such proceeding. (C) At the time the application or renewal application is filed, the application shall pay the permit processing fee established by separate resolution of the City Council.
(d) Applicants may apply to simultaneously vend both food and merchandise under the same permit application. If an applicant sidewalk vendor proposes to sell both food and merchandise, the City may approve a proposed sidewalkvendor to sell merchandise alone, food alone, neither, or both, and shall base its decision upon whether or not theapplicant meets all the necessary requirements contained in this chapter. Upon receiving approval to sell both merchandise and food, a permit-holding sidewalk vendor may sell both food and merchandise under the same permit. § 5-21.04. Prohibited Locations.
[6-4-2019 byOrd. No. 1175-19, effective 7-4-2019]
Sidewalk vendors shall not engage in sidewalk vendor activities at the following locations:
(a) The Cabrillo Mole.
(b) Crescent Avenue from the Cabrillo Mole to the Casino and any walkway adjacent to Crescent Avenue from the Cabrillo Mole to the Casino, except that a sidewalk vendor may operate on the City’s property at the Casino Dock location until a vendor with an exclusive agreement to sell food and beverages on said site opens, in which case sidewalk vending shall be prohibited.
(c) Any public property that does not meet the definition of a sidewalk or pathway including, but not limited to, an alley, intra block, walkway, beach, street, street end, or parking lot. (d) Joe Machado Field.
(e) Within 200 feet of:
(1) A permitted certified farmers’ market or swap meet during the limited operating hours of that certified farmers’ market or swap meet.
(2) An area designated for a special event permit issued by the City during the limited duration of the special event. § 5-21.05. Review of Permit Application; Decision.
[6-4-2019 by Ord. No. 1175-19, effective 7-4-201 9]
(a) Upon acceptance of a properly completed and filed sidewalk vendor permit application, the Community Services Director or the City Manager shall conduct a preliminary investigation to determine compliance with this chapter and shall make such determination within no more than 30 days of acceptance to approve or deny the application. The Community Services Director or City Manager shall provide the applicant with written notice of his or her decision to the address indicated in the application.
(b) The Community Services Director or City Manager may deny an application for a permit if he or she makes any of the following findings:
(1) The applicant has failed to pay the application permit fee. (2) The applicant has made one or more material misstatements in the application for a permit. (3) The applicant does not have a valid social security card or valid California Driver’s license; or valid individual taxpayer identification number; or a municipal identification number. (4) The applicant’s vending operation, as described in the application, is inconsistent with the standards, conditions, and requirements of this chapter.
(5) Within five years of the date of the application, the applicant has been convicted in a court of competent jurisdiction or pled nob contendere to any felony offense involving the sale of a controlled substance specified in California Health and Safety Code § 11054, 11055, 11056, 11057 or 11058, or at the time of application is on probation or parole for any offenses set forth in this section for an offense that was committed within five years of the date of the application.
(6) It is determined that the applicant does not possess all federal, state, and local permits and licenses necessary to engage in the activity in which he or she seeks to engage, except any permit required by the Los Angeles County Department of Public Health, in which case such permit shall be obtained within a year of the granting of a sidewalk vending permit.
(7) The City’s cap on the number of total sidewalk vending permits, being six, has been reached, with the understanding that a stationary vending permit shall also allow a person to be a roaming vendor for the same food and/or merchandise.
(8) The City’s cap on the number of sidewalk vending permits, being allowed with a designated public park, being one per park, up to a total of two permits to vend in public parks, has been reached. (9) The applicant proposes to sell alcohol, drugs, and/or cannabis. (10) A member of the applicant’s immediate family, defined as a spouse or children, already holds a permit. (11) The applicant is an agent and/or employee of the same company and/or corporation of another permit holder.(12) The pushcart, stand, display, pedal-driven cart, wagon, showcase, rack, or other nonmotorized conveyance the vendor proposes using exceeds the measurements of eight feet high by eight feet long by four feet wide. (13) The applicant proposes to use noise amplification devices. (c) If the application is denied, the reasons for disapproval shall be noted on the application, and the applicant shall be notified that his or her application is denied and that no permit will be issued. Notice shall be mailed to the applicant at the address shown on the application form.
(d) If the Community Services Director or City Manager approves the applicant’s permit, he or she shall endorse his or her approval on the application and shall, upon payment of the prescribed fee, deliver the permit to the applicant. Such permit shall state at which location(s) the applicant has been approved to vend and any conditions of approval for thepermit. (e) Exemptions. A sidewalk vending permit shall not be required for the following activities:
(1) The sale of agriculture products on the site where the product is grown. (2) Catering for private parties held exclusively on private property and not open to the general public. (3) Events permitted pursuant to a lawfully issued special event permit including but not limited to a certified farmers’ market, swap meet, street fairs, outdoor concerts, sport league opening day, and business sidewalk sales. (4) First Amendment Protected Vending.
(f) Term of Permit. The permits issued pursuant to this chapter shall automatically expire two years for food vendors and 18 months for merchandise vendors from the date issued, unless an earlier expiration date is noted on the permit. (g) Transferability. A sidewalk vending permit shall not be transferable to any other entity or person and is valid only as to the original applicant. Each individual who proposes to be a sidewalk vendor must apply for and receive a permit before commencing sidewalk vending activities.
(h) Display of Permit. Such permit shall, during the time such permittee is engaged in sidewalk vending, be worn constantly by the permittee on the front of his or her outer garment in such a way as to be conspicuous. Sidewalk vendors shall be required to exhibit their permits and/or licenses at the request of any person, in addition to wearing them in a conspicuous place.
(i) If an applicant is approved to receive such permit, and the applicant does not vend at least four times a week for two different unexcused four-consecutive-week periods within the period of one year, the permit shall automatically expire. If the applicant demonstrates to the City that he or she has a valid excuse for not vending at least four times per week forfour consecutive weeks, including but not limited to being sick, then the Community Services Director or City Manager may halt and/or reverse the automatic expiration of the permit’s validity. In order to satisfy this requirement that a sidewalk vendor vend on a certain day, that vendor must be open and operating for a minimum of four hours.

U) If more applications are received than there are available permits, the Community Services Director or City Manager shall administer a lottery system to award the permits via lottery to those applicants who have filed a complete application with the City, which may include a waiting list. The details of the operation of the lottery system shall be set by separate resolution of the City.
(k) If an applicant or permittee desires to appeal denial of their application or other ruling of the Community Services Director or City Manager on the grounds that the determination creates a hardship, such applicant or any other person aggrieved shall have the right to appeal such action or decision to the City Council within 15 days after the notice of the action or decision has been mailed to the person’ s address as shown on the permit application. An appeal shall be taken by filing with the City Clerk a written appeal statement setting forth the grounds for the appeal, along with the City’ s appeal fee, which shall be established by City Council resolution. A hearing shall be set not later than 60 days from the dates of filing of the applicants written appeal statement. [Added by Ord. No. 1200-21, eff. September 16, 2021]
§ 5-21.06. Stationary Sidewalk Vending Locations and Standards. [6-4-2019 by Ord. No. 1175-19, effective 7-4-20191
(a) Stationary sidewalk vendors shall be prohibited from operating or establishing in any residential zone of the City.(b) Stationary sidewalk vendors may operate in nonresidential zones of the City, including mixed use zones, provided they meet the following:
(1) The sidewalk vendor is duly licensed and meets all requirements of § 5-21.03;(2) The sidewalk vendor can set up their vending operation while still leaving a minimum of 48 inches of accessible path of travel, exclusive of the top of the curb, without obstruction, along the public sidewalk or public pathway. Noobstruction shall be located in a sidewalk or public right-of-way less than six feet in width when the sidewalk is adjacent to the curb;
(3) The sidewalk vendor maintains the vending area in a clean, orderly, and sanitary condition, including maintaining and emptying trash receptacles for waste generated by their operations; (4) The sidewalk vendor location does not block entrances to private buildings, private driveways, parking spaces or building windows;
(5) No vending shall occur within 10 feet of a fire hydrant, fire escape, bus stop, loading zone, handicapped parking space or access ramp, fire station driveway, or police station driveway; (6) No tables, chairs, fences, shade structures, other site furniture, or any freestanding signs shall be permitted in conjunction with the vendors’ vending activities;
(7) The vendor shall not attach or use any waterlines, electrical lines, or gas lines during vending operations; (8) Exterior storage or display of refuse, equipment, materials, goods, wares, or merchandise associated with the vendor is prohibited;
(9) To prevent foodborne illness and protect the health and safety of the City’s residents, every sidewalk vendor selling any food or beverage is required to wear a hairnet and food service gloves; (10) No vending shall occur within a corner cutoff area. A corner cutoff area is that area at all intersecting and intercepting streets or highways. The cutoff line shall be in a horizontal plane, making an angle of 450 with the side, front, or rear property line, as the case may be. It shall pass through the points located on both sides and front or rear property lines at a distance of 30 feet from the intersection of such lines at the corner of a street or highway; (11) No vending shall occur within three feet of any streetlights, edges of tree wells, parking meters, or aboveground utility structures;
(12) No vending shall occur within two feet of any existing subsurface utility box, valve, or vault; (13) No vending shall occur within 50 feet of another vendor; (14) No vending shall occur within 10 feet of bus stop locations, red curbs, or at locations where there are existing aboveground amenities such as newsstands or street furniture, including but not limited to benches and bike racks; (15) No vending shall occur in roadways, medians, pedestrian islands, or bikeways; (16) No vending shall occur within 20 feet of the entrance way to any building, store, theater, movie house, house of worship, or place of public assembly;
(17) A sidewalk vending permit does not provide an exclusive right to operate within any specific portion of the public right-of-way;
(18) No equipment or objects used for sidewalk vending purposes may be left unattended or maintained in public spaces or in any portion of the public right-of-way from 10:00 p.m. to 8:00 a.m. Any equipment or objects left overnight inpublic spaces or in any portion of the public right-of-way shall be considered discarded and may be seized or disposed of by the City;
[Amended byOrd. No. 1200-21, eff. September 16, 2021]
(19) To prevent unintended rolling or slipping, a sidewalk vendor is prohibited from operating a pushcart, pedal-driven cart, wagon, or other nonmotorized conveyance on a public right-of-way with a slope greater than 5%; (20) No vending shall occur within 20 feet of any location designated by the City’s Fire Department as needing to be kept clear for safety purposes; and
(21) Vending hours are restricted to between the hours of 2:00 a.m. and 8:00 am. [Amended by Ord. No. 1200-21, eff. September 16, 2021]
(c) In the spirit of cooperation and with a desire to encourage economic activity, the City has taken steps to map out suggested locations in which stationary sidewalk vendors could vend and meet all of the requirements enumerated inSubsection (b) of this § 5-21.06. Such approved suggested locations are on file at the office of the Community Services Director and the information is available upon request. (d) The City’s Fire Department shall have authority in unique situations to order sidewalk vendors to keep clear any and all areas that pose a risk to safety because of overcrowding. Unique situations that attract unusually large crowds include but are not limited to the Fourth of July.
§ 5-21.07. Sidewalk Vending in Parks.[6-4-2019 by Ord. No. 1175-1 9, effective 7-4-2019](a) Sidewalk vending of food or merchandise by stationary vendors shall be prohibited in any City park (Joe Machado Field) with a concession stand operated by a vendor under exclusive contract with the City selling similar food or merchandise. (b) Sidewalk vendors may operate in City parks provided they meet the following:
(1) The sidewalk vendor is duly licensed and meets all requirements of § 5-21.03;(2) For stationary sidewalk vending, the sidewalk vendor can set up their vending operation while still leaving a minimum of 48 inches of accessible path of travel, without obstruction, along the public sidewalk or public pathway; (3) The sidewalk vendor shall cease operations one hour prior to the close of the park;(4) The sidewalk vendor maintains the vending area in a clean, orderly, and sanitary condition, including maintaining and emptying trash receptacles for waste generated by their operations; (5) The sidewalk vendor location does not block entrances to buildings, driveways, parking spaces, or building windows;
(6) No vending shall occur within the immediate vicinity of an event held pursuant to a special event permit;(7) No vending shall occur within a corner cutoff area. A corner cutoff area is that area at all intersecting and intercepting streets or highways. The cutoff line shall be in a horizontal plane, making an angle of 45° with the side, front, or rear property line, as the case may be. It shall pass through the points located on both sides and front or rear property lines at a distance of 30 feet from the intersection of such lines at the corner of a street or highway; (8) The sidewalk vendor does not cause an undue concentration of commercial activity that unreasonably interferes with the scenic and natural character of the park or necessary to ensure the public’s use and enjoyment of natural resources and recreational opportunities or regulations directly related to objective health, safety, or wellness concerns;
(9) No vending shall occur in public streets, roadways, medians, pedestrian islands, parking lots, alleys, or bikeways; and
(10) The sidewalk vendor in parks shall be limited to one vendor per park, up to a total of two permits to vend in public parks.
§ 5-21.08. Roaming Sidewalk Vending.[6-4-2019 by Ord. No. 1175-1 9, effective 7-4-201 9] (a) Roaming sidewalk vendors shall meet the following:
(1) The sidewalk vendor is duly licensed and meets all requirements of 5-21.03 of this chapter; (2) Roaming sidewalk vending hours for residential zones are restricted to a start time of 8:00 a.m. and concluding one hour prior to dusk while for nonresidential zones vending hours are restricted to the same hours of operations as other businesses on the same street as the sidewalk vendor; (3) The sidewalk vendor maintains their temporary vending area in a clean, orderly, and sanitary condition, including maintaining and emptying trash receptacles for waste generated by their operations; (4) The sidewalk vendor does not block entrances to buildings, driveways, parking spaces, or building windows;(5) The sidewalk vendor does not conduct sales from a public street; (6) No vending shall occur within a corner cutoff area. A corner cutoff area is that area at all intersecting and intercepting streets or highways. The cutoff line shall be in a horizontal plane, making an angle of 450 with the side, front, or rear property line, as the case may be. It shall pass through the points located on both sides and front or rear property lines at a distance of 30 feet from the intersection of such lines at the corner of a street or highway; (7) No vending shall occur within three feet of any streetlights, edges of tree wells, parking meters, or aboveground utility structures;
(8) No vending shall occur within two feet of any existing subsurface utility box, valve, or vault; (9) No vending shall occur within 50 feet of another vendor; (10) No vending shall occur within 10 feet of bus stop locations, red curbs, or at locations where there are existing aboveground amenities such as newsstands or street furniture, including but not limited to benches and bike racks; (11) No vending shall occur in roadways, medians, pedestrian islands, or bikeways;(12) No vending shall occur within 20 feet of the entranceway to any building, store, theater, movie house, house of worship, or place of public assembly;
(13) To prevent foodborne illness and protect the health and safety of the City’s residents, every sidewalk vendor selling any food or beverage is required to wear a hairnet and food service gloves; (14) No equipment or objects used for sidewalk vending purposes may be left or maintained in public spaces or in any portion of the public right-of-way from 10:00 p.m. to 8:00 a.m. Any equipment or objects left overnight in publicspaces or in any portion of the public right-of-way shall be considered discarded and may be seized or disposed of by the City;
(15) To prevent unintended rolling or slipping, a sidewalk vendor is prohibited from operating a pushcart, pedal-driven cart, wagon, or other nonmotorized conveyance on a public right-of-way with a slope greater than 5%; (16) No vending shall occur within 20 feet of any location designated by the City’s Fire Department as needing to be kept clear for safety purposes; and
(17) No vending shall occur in public beach areas or on walkways that are adjacent to the public beach areas. § 5-21.09. Suspension; Rescission.
[6-4-2019 by Ord. No. 1175-19, effective 7-4-2019](a) A sidewalk vendor permit issued under this chapter may be suspended or rescinded by the Community Services Director or City Manager after four or more violations of this chapter in accordance with § 5-21.11 of this chapter, at theirdiscretion, for any of the following causes:
(1) Fraud or misrepresentation in the course of vending; (2) Fraud or misrepresentation in the application for the permit; (3) Vending in a manner that creates a public nuisance or constitutes a danger to the public. (b) Notice of the suspension or rescission of a sidewalk vendor permit issued under this chapter shall be mailed, postage prepaid, to the holder of the sidewalk vendor permit at his or her last known address. § 5-21.10. Appeals to City Manager.
[6-4-2019 by Ord. No. 1175-1 9, effective 7-4-2019]
In the event that any applicant or permittee desires to appeal from any order, rescission, or other ruling of the CommunityServices Director made under the provisions of this chapter, such applicant or any other person aggrieved shall have the right to appeal such action or decision to the City Manager within 15 days after the notice of the action or decision has been mailed to the person’s address as shown on the permit application. An appeal shall be taken by filing with the City Clerk a written appeal statement setting forth the grounds for the appeal, along with the City’s appeal fee, which shall be established by City Council resolution. The filing of the appeal shall stay the enforcement of any decision suspending or rescinding thepermit. The Community Services Director shall transmit the written statement to the City Manager within 10 days of its filing and payment of the appeal fee, and the City Manager shall set a time and place for a hearing on appeal. A hearing shall beset not later than 60 days from the date of filing of the applicant’s written appeal statement with the Police Department. Notice of the time and place of the hearing shall be given to the appellant in the same manner as provided for the mailing of noticeof suspension or rescission at least five days prior to the date set for the hearing. At the hearing, the permittee and the City shall be entitled to legal representation and may present relevant evidence, testify under oath, and call witnesses who shall testify under oath. The City Manager shall not be bound by the traditional rules of evidence in a hearing, except that hearsay evidence may not be the sole basis for the decision of the City Manager. The City Manager may continue the hearing as deemed necessary. The decision of the City Manager on the appeal shall be final and binding on all parties concerned. § 5-21.11. Penalties.
[6-4-2019 by Ord. No. 1175-19, effective 7-4-2019]
(a) It is unlawful for any person to violate any provision or fail to comply with any requirements of this chapter. A violation of this chapter shall by punished by:
(1) An administrative fine not exceeding $100 for a first violation. (2) An administrative fine not exceeding $200 for a second violation within one year of the first violation.(3) An administrative fine not exceeding $500 for each additional violation within one year of the first violation. (4) Rescinding the vending permit issued to the vendor for the remaining term of that permit upon the fourth violation or subsequent violations.
(b) A violation of vending without a sidewalk vending permit may, in lieu of the penalties set forth in Subsection (a), set forth above, be punished by:
(1) An administrative fine not exceeding $250 for a first violation.(2) An administrative fine not exceeding $500 for a second violation within one year of the first violation. (3) An administrative fine not exceeding $1,000 for each additional violation within one year of the first violation. (c) If an individual is subject to Subsection (b), set forth above, for vending without a sidewalk vending permit, upon the individual providing proof of a valid permit issued by the City, the administrative fines set forth in this chapter shall bereduced to the administrative fines set forth in Subsection (a), respectively. (d) The proceeds of any administrative fines assessed pursuant to this chapter shall be deposited in the treasury of the City. (e) Failure to pay an administrative fine assessed under this chapter shall not be punishable as an infraction or misdemeanor. Additional fines, fees, assessments, or any other financial conditions beyond those authorized in this chapter shall not be assessed.
(f) Any violation of this chapter shall not be punishable as an infraction or misdemeanor, and any person alleged to have violated any provisions of this chapter shall not be subject to arrest except when otherwise permitted under law. (g) When assessing an administrative fine pursuant to this chapter, the adjudicator shall take into consideration the person’s ability to pay the fine. The City shall provide the person with notice of his or her right to request an ability-to-pay determination and shall make available instructions or other materials for requesting an ability-to-pay determination. The person may request an ability-to-pay determination at adjudication or while the judgment remains unpaid, including when a case is delinquent or has been referred to a comprehensive collection program. (1) If the person meets the criteria described in Subdivision (a) or (b) of Government Code § 68632, the City shall accept, in full satisfaction, 20% of the administrative fine imposed pursuant to this chapter. (2) The City may allow the person to complete community service in lieu of paying the total administrative fine, may waive the administrative fine, or may offer an alternative disposition. (h)
A person who is currently serving, or who completed, a sentence, or who is subject to a fine, for a conviction of a misdemeanor or infraction for sidewalk vending, whether by trial or by open or negotiated plea, who would not have been guilty of that offense under SB 946 had SB 946 been in effect at the time of the offense, may petition for dismissal of thesentence, fine, or conviction before the trial court that entered the judgment of conviction in his or her case. (i) Nothing contained herein shall be construed to impede the City’s or county’s ability to enforce County Health Department codes and regulations.