AMENDED
AVALON SPECIAL CITY COUNCIL MEETING
TUESDAY, THURSDAY, JULY 24, 2025 - 4:30 PM
410 AVALON CANYON ROAD
AGENDA
In compliance with the Americans with Disability Act, if you need special assistance to participate in this meeting, please contact the City Clerk's Office (310) 510-0220. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. (28 CFR 35. 102-35.104 ADA Title II). All public records relating to an agenda item on this agenda are available for the public inspection at the time the records are distributed to all, or a majority of all, members of the City Council. Such records shall be available at City Hall located at 410 Avalon Canyon Rd.
For the public's convenience, but not participation, the meeting can be viewed:
On local cable: Catalina Broadband Solutions channel 3
Streaming on YouTube: https://www.youtube.com/CityofAvalonCA
CALL TO ORDER / PLEDGE OF ALLEGIANCE / INVOCATION / ROLL CALL
ORAL COMMUNICATION
Members of the public may address the City Council at this time. No action will be taken on non-agenda items at this meeting. Speakers should limit comments to two (2) minutes each.
GENERAL BUSINESS
1. Advance Payment of Measure C Funds to the Catalina Island Medical Center (CIMC) The Catalina Island Medical Center (CIMC) has asked the City Council to approve execution of an agreement to provide an advance payment of approximately $1,106,450.00 from the City's general fund so that CIMC can participate in a Medicaid program to receive a substantial increase in funding.
Recommended Action
1. Approve the Intergovernmental Transfer (IGT) Agreement with the Department of Health Care Services (DHCS), which obligates the City to make an IGT transfer in the amount of ap-proximately $1,106,450.00 (including a DHCS Administrative Fee described below) and subject to reconciliation by DHCS for Catalina Island Medical Center's (CIMC) participation in the Voluntary Rate Range Intergovernmental Transfer Program, which CIMC believes will result in increased funding for CIMC.
2. Approve the transfer of approximately $1,106,450.00 to DHCS on or before November 21, 2025 in accordance with the IGT Agreement. 3. Approve an advance payment agreement with CIMC, whereby CIMC would allow the City to offset the amount of the IGT transfer of $1,106,450.00 plus City Attorneys' fees incurred in connection with the advance payment and certain administrative and lost opportunity fees, through Measure C funds, and, if necessary, any other available and permissible CIMC revenues over the course of eighteen months.
ADJOURN
NOTICE OF POSTING
1, Gabrielle Morones, declare that the Special City Council Agenda for Thursday, July 24, 2025 was posted on Monday, July 21, 2025 on the City's website, www.cityofavalon.gov/agendacenter, and at City Hall, 410 Avalon Canyon Road.
bulla Mer
Gabrielle Morones, City Clerl
CITY OF AVALON CITY COUNCIL
MEETING DATE: July 24, 2025 AGENDA ITEM:
ORIGINATING DEP: City Manager, City Attorney CITY MANAGER: DMi PREPARED BY: Scott Campbell, City Attorney
SUBJECT: Advance Payment of Measure C Funds to the Catalina Island Medical Center (CIMC)
RECOMMENDED ACTION(S): 1. Approve the Intergovernmental Transfer (IGT) Agreement with the Department of Health Care Services (DHCS), which obligates the City to make an IGT transfer in the amount of approximately $1,106,450.00 (including a DHCS Administrative Fee described below) and subject to reconciliation by DHCS for Catalina Island Medical Center's (CIMC) participation in the Voluntary Rate Range Intergovernmental Transfer Program, which CIMC believes will result in increased funding for CIMC. 2. Approve the transfer of approximately $1,106,450.00 to DHCS on or before November 21, 2025 in accordance with the IGT Agreement. 3. Approve an advance payment agreement with CIMC, whereby CIMC would allow the City to offset the amount of the IGT transfer of $1,106,450.00 plus City Attorneys' fees incurred in connection with the advance payment and certain administrative and lost opportunity fees, through Measure C funds, and, if necessary, any other available and permissible CIMC revenues over the course of eighteen months.
REPORT SUMMARY: The Catalina Island Medical Center (CIMC) has asked the City Council to approve execution of an agreement to provide an advance payment of approximately $1,106,450.00 (including a State of California Administrative Fee described below) from the City's general fund so that CIMC can participate in a Medicaid program to receive a substantial increase in funding.
The Medicaid program (called "MediCal" in California) is jointly funded by the State of California and the federal government for certain residents of the State. The State's share of the funding is a combination of State funds appropriated to DHCS, public funds transferred from other public agencies such as cities or counties (called "Intergovernmental Transfer" or "IGT"), and certain health care-related taxes. These funds together represent the "non-federal share" of the funding to pay for Medi-Cal program expenses and are used to draw down matching federal funds.
The specific program that CIMC wants to participate is called the Voluntary Rate Range Intergovernmental Transfer Program. It was established in 2011-2012 to allow local public "transferring entities" to contribute their own funds via IGTs to help DHCS to pay capitation rates to Medi-Cal managed care plans at the upper bound of the rate range and to draw down matching federal funds based on those higher rates. The plans must use the "rate range increases" (that is, the difference between the lower bound and the upper bound of the range) to make increased payments to health care providers to increase access to services for their Medi-Cal enrollees.
15160 AM 12016201712
Participation in the program is voluntary for public transferring entities and each Medi-Cal managed care plan. For each Medicaid managed care plan year (calendar year), DHCS asks the managed care plans and transferring entities for their interest in participating in the Program-demonstrated by completing a non-binding Letter of Interest ("LOI") regarding the Rating Period CY 2024 (January 1, 2024 - December 31, 2024) Voluntary Rate Range Program.
At the March 18, 2025 City Council meeting, the City Council authorized the filing of an LOI with DHCS, subject to DHCS approval. The Council approved applying for the program with a potential IGT transfer of up to $2,800,000 unallocated funds from the City's General Fund from the City to support CIMC's participation in the Voluntary Rate Range Program with L.A. Care,.
L.A. Care submitted the application to DHCS and DHCS approved participation in the program - but only with a payment of $922,042.00 plus the State Administrative Fee of $184,408.00 for a total Advance Payment of $1,106,450.00, not the $2,800,000 originally requested. (See Exhibit 1.) DHCS also provided an IGT Agreement to the City for execution on or before August 1, 2025. The actual IGT transfer of funds associated with this IGT Agreement is due on or before November 21, 2025. There is a possibility that the payment amount could be further adjusted, subject to a reconciliation by DHCS over the term of the IGT Agreement. This lower amount of this request reduces the risk to the City.
Any funds CIMC receives through this program must be used by CIMC for services to Medi- Cal members and cannot be used to pay back the City. The City would be paid back from the use of funds from Measure C, the sales tax that was approved by City voters for support of hospital services, as well as other available and permissible CIMC revenues. Revenue and Taxation Code sections 7286.25-7286.26 authorize Avalon to impose a special sales tax to be used "exclusively for the Avalon Municipal Hospital and Clinic." This authority is broad and seems to contemplate that the Hospital could use Measure C funds to repay debt incurred for the benefit of the Avalon Municipal Hospital and Clinic, regardless of the lender. The City was unable to locate the ballot documents for the sales tax to determine if any limitations were imposed by the documents, which is unlikely giving the information from the election we were able to find.
The advance by the City to CIMC would be paid back over the course of approximately 18 months, during which time the City would offset payments to CIMC under Measure C until the advance payment was repaid. If the Measure C funds were insufficient to fully repay the advance payment amount in 18 months, then the advance payment would be repaid through any available and permissible CIMC revenues. The CIMC advance payment agreement, attached as Exhibit 3, includes the following terms:
1. Advance Amount: Not to exceed $1,106,450.00 [plus or minus any amounts plus or minus any amounts due after reconciliation by the California Department of Health Care Services (:DHCS) of the Estimated L.A. Care Member Months for Calendar Year 2024 attributable to the Medical Center under the Intergovernmental Transfer Agreement between the City of Avalon and DHCS]
2. Source of Repayment: Measure C Funds and other available and permissible CIMC revenues.
3. Term: Eighteen months from date of disbursement of the advance amount.
Administrative Fees: City Administrative Fee equal to (i) 4.5% of the total amount advanced on behalf of CIMC and (i) 2.25% of the outstanding amount owing to the City as of the first anniversary of the date of disbursement of the advance amount, to account for the lost opportunity costs of interest and expense associated with administration of the advance payment. In addition, CIMC will pay for the City's attorneys' fees incurred in connection with the advance payment.
Repayment: 100% of Advance Amount, commencing as of the end of the first quarter after the City's funding of the advance or April 1, 2026, with the balance due from operating funds if not repaid in full by end of term.
Covenants to include prohibition on sale of hospital or change of ownership without City consent, and requirement for monthly meetings between City and hospital management regarding the status of any future plans for the hospital (including any proposed sale, affiliation, or change of ownership of the hospital.
Financial reporting requirements, including audited financial statements, and monthly or quarterly financial statements, at the discretion of the City.
8. Customary representations and warranties of the hospital.
FISCAL IMPACTS. A reduction in general funds with repayment over eighteen months from date of disbursement of the Advance Payment.
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The Hospital will not receive the fee increases from L.A. Care Plan and would need to seek funds from other sources.
FOLLOW UP ACTION: Execution of IGT Agreement with DHCS and advance payment agreement with CIMC on or before August 1, 2025, and transfer of IGT amount to DHCS by November 21, 2025.
ADVERTISING, NOTICE AND PUBLIC CONTACT: Pursuant to the Brown Act.
ATTACHMENTS: Letter from DHCS, Intergovernmental Transfer Agreement, Advance Payment Agreement.
1500000 180530717
Exhibit 1
Letter from DHCS transmitting the Intergovernmental Transfer Agreement with DHCS Devin Thompson
From: Leeann Habte <[email protected]>
Sent: Thursday, July 17, 2025 6:37 PM
To: Leeann Habte
Subject: FW: CY 2024 VRRP IGT Agreement for Signature due 8/1/25 - City of Avalon Attachments: IGT-24-0007 City of Avalon CY 2024 IGT Agreement-c1-c1.docx Leeann Habte
BBK Partner
[email protected]
T: (213) 7872572 | C: (818) 522 7283
BEST BEST & KRIECER.
ATTORNEYS AT LAW bbklaw.com | lin
From: Gale, Scott@DHCS <Scott [email protected]>
Sent: Wednesday, May 7, 2025 8:54 AM
To: David Maistros <dmaistros @@cityofavalon gov»; Matthew Baker <[email protected]> Cc: Beeck, Vivian@ DHCS <Vivian Beeck @dhes.co.gov>; Jordan, Michael@DHCS < Michael Jordantches ca gov> Subject: CY 2024 VRRP IGT Agreement for Signature due 8/1/25 - City of Avalon Some people who received this message don't often get email from scott daleodhes cagov, Learn way this is maportant Good morning City of Avalon,
Welfare and Institutions Code sections 14164 and 14301.4 authorize the Department of Health Care Services (DHCS) to implement a voluntary Rate Range Program relating to the Medi-Cal managed care capitation rate ranges. The funding amounts under the Voluntary Rate Range Program are the nonfederal share of the difference between the Medi-Cal managed care plan (MCP) contracted capitation rates and the top of the MCPs' actuarially sound rate range, as determined by DHCS. The funds voluntarily transferred by the governmental funding entities (counties, cities, special purpose districts, state university teaching hospitals, or any other political subdivision of the state) to DHCS for this program shall be used to fund the nonfederal share of Medi-Cal managed care actuarially sound capitation rates described in section 14301.4(b)(4) of the Welfare and Institutions Code. These funds shall be paid, together with the related federal financial participation, by DHCS to MCPs as part of capitation rates for the rating period of Calendar Year (CY) 2024.
DHCS received your letter(s) of interest regarding the Rating Period CY 2024 (January 1, 2024 - December 31, 2024) Voluntary Rate Range Program. Please refer to the attached document titled "Intergovernmental Agreement Regarding Transfer of Public Funds" for the actual contribution per member per month amounts by rate category. Please review the attached agreement, which lists the contacts for your funding entity. If you wish to add anyone or change who is there, please do so now. The agreement also lists your total IT amount and any amounts not subject to the 20% assessment fee in accordance with Welfare and Institutions Code section 14301.4(d) and 14301.5(b)(4).
Each governmental funding entity that has chosen to participate in the Rating Period CY 2024 Voluntary Rate Range Program must complete the attached Final "Intergovernmental Agreement Regarding Transfer of Public Funds," between the governmental funding entity and DHCS. Complete Section 5 - Notices (individual's name, mailing address and e-mail address), and in the Signature Section, include the name of the governmental funding entity as well as the name and title of the person executing the agreement. All other sections have been completed by DHCS.
DHCS will accept and would prefer DocuSign digital signature(s) on the final agreements. Please obtain the necessary signature(s) and submit via e-mail to [email protected], and co [email protected].
If you need assistance initiating the DocuSign - digitally signed document, the process takes us about 10 minutes to create and send to you, we will need their Name, Title, and Email address. Please contact any one of us: Scott Gale at Scott [email protected], or Vivian Beeck at [email protected]; and one of us will assist you.
Please refrain from including/ requesting any DHCS signature while obtaining your organization's signatures. We will obtain our authorized DHCS signature separately and send you the executed contract with all final signatures.
If your organization requires the use of a "wet signature," please obtain the necessary signature(s) on two (2) originally signed copies of the agreement, and email the signed agreements to Vivian Beeck at DHCS, and [email protected] for execution on or before August 1, 2025.
Please do not submit any agreements/contracts between the MCPs and providers related to the Rating Period CY 2024 Voluntary Rate Range Program.
Invoicing for CY 2024 IT amounts will occur in October 2025, with payment collection deadline by November 21, 2025.
Thank you,
Scott Gale | Associate Governmental Program Analyst
Capitated Rates Development Division, Financial Management Section C California Department of Health Care Services
DHCS
Confidentiality Notice: This communication, including any attachments, is for the sole use of the intended recipients) and may contain confidential and/or legally privileged information. Any unauthorized review, use, disclosure, interception, and/or distribution of this message and/or any attachments, is strictly prohibited and may violate applicable laws including the Electronic Communications Privacy Act. If you are not the intended recipients), please immediately contact the sender and kindly destroy all copies of the original communication as well as any attachments. Thank you in advance for your cooperation.
CONFIDENTIALITY NOTICE: This e-mail and any attachments may contain information which is confidential, sensitive, privileged, proprietary or otherwise protected by law. The information is solely intended for the named recipients, other authorized individuals, or a person responsible for delivering it to the authorized recipients. If you are not an authorized recipient of this message, you are not permitted to read, print, retain, copy or disseminate this message or any part of it. If you have received this e mail in error, please notify the sender immediately by return e-mail and delete it from your e-mail inbox, including your deleted items folder.
Disclaimer
This message (including any attachments) may contain confidential, proprietary, privileged and/or private information. The information www.cityofavalon.gov
2 Exhibit 2
Intergovernmental Transfer Agreement with DHCS
ASASE neM 13003071 d
CONTRACT #IGT-24-0007
INTERGOVERNMENTAL AGREEMENT REGARDING
TRANSFER OF PUBLIC FUNDS
This Agreement is entered into between the C'ALIFORNIA DEPARTMENT OF HEALTH CARE SERVICES ("DHCS") and CITY OF AVALON (COVERNMENTAL FUNDING ENTITY") with respect to the matters set forth below.
The parties agrec as follons:
AGREEMENT
Transfer of Public Funds
1.1 The GOVERNMENTAL FUNDING ENTTTY agrees to make a transfer of funds to DHCS pursuant to sections 14164 and 14301.4 of the Welfare and Institutions Code.
The amount transferred shall be based on the sum of the applicable rate category per member per month ("PMPM") contribution increments multiplied by member months, as reflected in Exhibit
1. The GOVERNMENTAL FUNDING ENTITY agrees to initially transfer amounts that are calculated using the Estimated Member Months in Exhibit I. which will be reconciled to actual enrollment for the service period of January 1. 2024 through December 31. 2024 in accordance with Sub-Section 1.3 of'this Agreement. The funds transferred shall be used as described in Sub- Section 2.2 of this Agreement. The funds shall be transferred in accordance with the terms and conditions. including schedule and amount, established by DHCS.
1.2 The GOVERNMENTAL FUNDING ENTITY shall certily that the funds transferred qualify for Federal Financial Participation pursuant to 42 C.F.R. part 433, subpart B, and are not derived from impermissible sources such as recycled Medicaid payments. Federal money excluded from use as State match, impermissible taxes, and non-bona fide provider- Template Version - 4/2025
CONTRACT # IGT-24-0007
related donations. Impermissible sources do not include patient care on other revenue received from programs such as Medicare or Medicaid to the extent that the program revenue is not obligated to the State as the source of funding.
1.3 DHCS shall reconcile the "Estimated Member Months." in Exhibit I. to actual enrollment in HEALTH PLAN(S) for the service period of January 1. 2024 through December 31. 2024 using actual emollment figures taken from DHCS records. Enrollment reconciliation will occur on an ongoing basis as updated enrollment figures become available.
Actual enrollment figures will be considered final two years alter December 31. 2024. If reconciliation results in an increase to the total amount necessary to fund the nonfederal share of the payments described in Sub-Section 2.2. the GOVERNMENTAL FUNDING ENTTTY agrees to transfer any additional funds necessary to cover the difference. If reconciliation results in a decrease to the total amount necessary to fund the nonfederal share of the payments described in Sub-Section 2.2. DHCS agrees to return the unexpended funds to the GOVERNMENTAL.
FUNDING ENTITY IEDHCS and the GOVERNMENTAL FUNDING ENTTTY mutually agree, amounts due to or owed by the GOVERNMENTAL FUNDING ENTTTY may be offset against future transfers,
2. Acceptance and Use of Transferred Funds
2.1 DHCS shall exercise its authority under section 14164 of the Welfare and Institutions Code to accept funds transferred by the GOVERNMENTAL FUNDING ENTTTY pursuant to this Agreement as Intergovernmental Transfer (IGTs), to use for the purpose set forth in Sub-Section 2.2.
2.2 The lunds transferred by the GOVERNMENTAL FUNDING ENTITY pursuant to Section 1 and Exhibit 1 of this Agreement shall be used to fund the non-federal share 2 Template Version - 4/2025
CONTRACT# IGT-24-0007
of Medi-Cal Managed Care actuarially sound capitation rates described in section 14301.4(b)(4) of the Welfare and Institutions Code as rellected in the contribution PMI'M and rate categories reflected in Exhibit 1. The funds transferred shall be paid, together with the related Federal Financial Participation. by DECS to HEALTH PLAN(S) as part of HEALTH PLAN(S) capitation rates for the service period of January 1. 2024 through December 31, 2024. in accordance with section 14301.4 of'the Welfare and Institutions Code.
2.3 DHCS shall seek Federal Financial Participation for the capitation rates specified in Sub-Section 2.2 to the full extent permitted by federal lan.
2.4 The parties acknowledge that DHCS will obtain any necessary approvals from the Centers for Medicare and Medicaid Services.
2.5 DHCS shall not direct HEALTH PLAN(S) expenditure of the payments received pursuant to Sub-Section 2.2.
Assessment Fee
3.1 DHCS shall exercise its authority under section 14301.4 of the Welfare and Institutions Code to assess a 20 percent fee related to the amounts transferred pursuant to Section 1 of this Agreement, except as provided in Sub-Section 3.2. GOVERNMENTAL FUNDING ENTTTY agrees to pay the full amount of that assessment in addition to the funds transferred pursuant to Section I of'this Agreement.
3.2 The 20-percent assessment fee shall not be applied to any portion of funds transferred pursuant to Section 1 that are exempt in accordance with sections 14301.4(d) or 14301.5(b)(4) of the Welfare and Institutions Code. DHCS shall have sole discretion to determine the amount of the funds transferred pursuant to Section I that will not be subject to a 3 Template Version - 4/2025
CONTRACT # KTT-24-0007
20 percent fee. DHC'S has determined that $0.00 of the transfer amounts will not be assessed a 20 percent fee. subject to Sub-Section 3.3.
3.3 The 20-percent assessment fee pursuant to this Agreement is non- refundable and shall be wired to DHO'S simultaneously with the transfer amounts made under Section 1 of this Agreement. I at the time of the reconciliation performed pursuant to Sub- Section 1.3 ofthis Agreement, there is a change in the amount transferred that is subject to the 20-percent assessment in accordance with Sub-Section 3.1. then a proportional adjustment to the assessment fee will be made.
Amendments
No amendment of modification to this Agreement shall be binding on either party unless made in writing and executed by both parties.
4.2 The parties shall negotiate in good faith to amend this Agreement as necessary and appropriate to implement the requirements set forth in Section 2 of this Agreement.
Notices. Any and all notices required, permitted, or desired to he given hereunder by one party to the other shall either be sent via secure email or submitted in writing to the other party personally or by United States Fürst Class. Certified or Registered mail with postage prepaid, addressed to the other party at the address as set forth below:
To the GOVERNMENTAL FUNDING ENTTTY:
David Maistros, City Mgr.
4 Template Version - 4/2025
CONTRACT #IG1-24-0007
410 Avalon Canyon Rd/ PO Box 707
Avalon. CA
90704 (310) 510-0220 x 122
dmaistros @cityofavalon.gov
With copies to:
Matthew Baker. Finance Dir.
410 Avalon Canyon Rd/ PO Box 707
Avalon. CA 90704
(310) 510-0220 x 170
mbaker @ cityofavalon.gov
To DHCS:
Vivian Beeck
California Department of Health Care Services
Capitated Rates Development Division
1501 Capitol Ave.. M$ 4413
Sacramento, CA 95814
Vivian.Bcock/adhcs.ca.gov
6. Other Provisions
6.1 This Agreement contains the entire Agreement between the parties with respect to the Medi-Cal payments described in Sub-Section 2.2 of'this Agreement that are funded bythe GOVERNMENTAL FUNDING ENTITY, and supersedes any previous or contemporaneous oral or written proposals, statements, discussions, negotiations or other agreements between the GOVERNMENTAL FUNDING ENTTTY and DHCS relating to the subject matter of this Agreement. This Agreement is not, however, intended to be the sole agreement between the parties on matters relating to the funding and administration of the Medi- C'al program. This Agreement shall not modify the terms of'any other agreement, existing or entered into in the future. between the parties.
5 Template Version - 4/2025
CONTRACT # IG1-24-0007
6.2 The non-enforcement or other waiver of any provision of this Agreement shall not be construed as a continuing waiver or as a waiver of any other provision of this Agreement.
6.3 Sections 2 and 3 of this Agreement shall survive the expiration or termination of this Agreement.
6.4 Nothing in this Agreement is intended to confer any rights or remedies on any third party. including, without limitation, any provider(s) or groups of providers. or any right to medical services for any individual(s) or groups of individuals. Accordingly. there shall be no third party beneliciary of'this Agreement.
6.5 Time is of the essence in this Agreement.
6.6 Each party hereby represents that the person(s) executing this Agreement on its behalf'is duly authorized to do so. Any required signaturets) on any documents must be in compliance with California Government Code section 16.5 and any other applicable state or federal regulations.
7. State Authority. Except as expressly provided herein, nothing in this Agreement shall be construed to limit, restrict. or modify the DACS" powers, authorities. and duties under Federal and State law and regulations.
Approval. This Agreement is of no force and effect until signed by the parties.
Term. This Agreement shall be effective as of January 1. 2024 and shall expire as of June 30. 2027 unless terminated earlier by mutual agreement of the parties. 6 Template Version - 4/2025
CONTRACT # IGT-24-0007
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Agreement. on the date of the last signature below.
CITY OF AVALON:
By: Date:
(Funding Entity Signer)
THE STATE OF CALIFORNIA, DEPARTMENT OF HEALTH CARE SERVICES:
By: Date:
Authorized Representative, Department of Health Care Services 7 Template Version - 4/2025
CONTRACT # IGT-24-0007
Exhibit 1
Health Pian Funding Entity Rating Region Service Period Participation% LA Care Health Plan City of Avalon Los Angeles 1/2024 - 12/2024 0.50% Contribution Estimated Member Estimated
Category of Aid SIS/UIS PMPM Contribution (Non-
Months* Foderal Share)
Child SIS 0.02 7,701,982 154,100
Child UIS en en es 0.01 603,142 6,031
Adult SIS 0.04 2,516,593 $ 100,664
Adult UIS 0.03 1,862,700|5 55,881
Adult Expansion SIS 0.01 8,418,457 5 84,185
Adult Expansion UIS $ 0.01 2,212,212 $ 22,122
SPD SIS 0.15 1,561,104 $ 234,166
SPD UIS 0.06 364,877 $ 21,893
SPD Dual SIS $ 0.06 2,958,235 177,194
SPD Dual $ 0.01 29,253$ 293
LTC SIS $ 1.15
8,584 $ 9,872
LTC UIS $ 0.21 1,8905 1,027
LTC Dual ISIS $ 0.73 74,334 $ 54,264
LTC Dual UIS 0.07 721 50
Est. FE Total 28,320,084 922,042
* Note that Estimated Member Months are subjeet to variation, and the actual total Contribution (Non-federal Share) may differ from the amount listed here. *EMAP is a weighted blend of multiple FMAPs.
Template Version - 4/2025
Exhibit 3
Advance Payment Agreement with CIMC
p2r20/0/100320712
ADVANCE PAYMENT AND SECURITY AGREEMENT
This Advance Payment and Security Agreement ("Agreement") is made and entered into this day of July, 2025 (Elective Date"), by and between the CITY OF AVALON. a municipal corporation ("City"), and AVALON MEDICAL DEVELOPMENT CORPORATION. a California nonprofit public benefit corporation. dba Catalina Island Medical Center ("Medical Center"). City and Medical Center are sometimes individually referred to herein as a "Party" and. together. as the "Partics."
RECITALS
A. WHEREAS, Medical Center operates an acute care hospital and medical clinic located at 500 Falls Canyon Rd.. Avalon. California (the "Medical Facility"); B. WHEREAS, Medical Center has requested City to advance the sum of One Million One Hundred Six Thousand Four Hundred Filty Dollars ($1,106,450.00) (the "Advance Payment") to allow the Medical Center to participate in a Medicaid (Medi-C'al) program which is expected to provide the Medical Center a substantial increase in funding:
C. WHEREAS, specifically. the Medical Center desires to participate in the Voluntary Rate Range Intergovermental Transfer Program (the "Program"). allowing local public transferring entities to contribute funds via intergovernmental transfers (IGTs") to help the California Department of Health Care Services ("DHCS") make increased payments to health care providers through managed care capitation rate increases to health plans; and WHEREAS, DHCS has approved of the participation by Medical Center in the Program, subject to the City's execution of an IGT agreement with DHCS (the "IGT Agreement") and the City's transfer of funds to the State of California in the amount of the Advance Payment.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties agree as follows:
AGREEMENT
Section 1. Definitions. As used in this Agreement, the following terms will have the meaning set forth herein below, except where, from the context, it is clear that another meaning is intended. Many words and terms are capitalized throughout this Agreement to indicate that they are defined as set forth in this Section.
"Administrative Fee" means the fees to be paid to the City by the Medical Center pursuant to Section 4 hereof.
"Advance Payment" means a one-time transfer in the amount of One Million One Hundred Six Thousand Four Hundred Fifty Dollars ($1,106,450.00), which amount consists of $922.042.00 as the IGT amount calculated by DHCS and $184.408.00 as the State Administrative Fice, made by City to the State of California pursuant to Section 2 of this Agreement as a payment made for the benefit of Medical Center and as an advance on funds to be received by Medical Center pursuant to Measure C and from other permissible sources of repayment.. "Collateral" is defined in Section 6 hereol.
"Disbursement Date" means the date the City delivers the Advance Payment to the State of California pursuant to the IGT Agreement.
"Event of Default" is delined in Section 7 hereol.
"Governmental Authority" means any nation or goverment. any state or other political subdivision thereof. and any agency, department or other entity exercising executive. legislative. judicial, regulatory or administrative fictions of'or perlaining to government. "IGT Agreement" is defined in Recital D. "Insolvency Proceeding" means the insolvency of a Person, the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official of'any part of'a Person's property, an assignment by a Person for the benefit of creditors. or the voluntary or involuntary commencement of any proceeding under the United States Bankruptcy Code or any other bankruptcy or insolvency law, by or against a Person. including the winding-up or liquidation of a Person.
"Lease" shall mean that certain Lease and Operating Agreement dated September 16. 2003. beloveen the City and Medical Center, as amended from time to time. "Measure C" means the sales tax initiative approved on April 11. 2000. providing for a special one-hall percent sales tax to be used exclusively for the Avalon Municipal Hospital and Clinic.
"Measure C Funds" means the funds received by the C'ity and/or the Medical Center pursuant to Measure C.
"Obligations" means all obligations of Medical C'enter to City arising pursuant to this Agreement. including without limitation. the repayment of the Advance Payment (including the portion relating to the State Administrative Fee), the payment of the Administrative Fee. and the payment of City's attorneys fees.
"Person" means an individual. a corporation, limited liability company. partnership, joint venture. association. joint-stock company, trust. unincorporated organization, or other business entity. or a government or any agency or political subdivision thereof. "State Administrative Fee" means the fee due to the State of California in an amount equal to 20% of the amount of the IGT amount (i.c., $184,408.00) pursuant to the terms of. or otherwise in connection with. the ICT Agreement and/or the Medical Center's participation in the Program.
Section 2. Advance Payment. Provided no Event of Default has occurred and is continuing, and subject to (i) the City's and the State of California's execution of the ICT Agreement on or before August 1,2025. and (1) City'sreceipt of evidence satisfactory to City that (a) the Medical Center continues to be eligible for participation in the Program. City shall transfer to the State of California the Advance Payment in accordance with the terms of the IGT Agreement.
Medical Center acknowledges and agrees that Medical Center has requested the City to deliver the Advance Payment in accordance with the IGT Agreement. and that the delivery of the Advance 2 Payment is for the benefit of the Medical Center. Medical Center further acknowledges that the City will include as part of the Advance Payment, unless waived by the State of California. the State Administrative Fee. In the event the State Administrative Fce is not required to be paid to the State of California, the Advance Payment amount will be reduced by the amount initially calculated as the amount of the State Administrative Fee. 3 Reconciliation. To the extent that the State or L.A. Care Health Plan reconciles the amount of the IG! Payment as permitted by the ICil Agreement. the parties agrees to make additional payments to the State or accopt refunds of payments made. as required by the Kil Agreement and to reconcile payments between them in accordance with the IGT Agreement and this Agreement.
Section 3. Repayment of Obligations.
Medical Center agrees that the Obligations shall be repaid to the City from Measure C Funds or from any other source of available and permissible funds. as established by the Centers for Medicare and Medicaid Services ("CMS") and DHCS. of the Medical C'enter in accordance with the repayment schedule set forth on Exhibit A. Repayment of Measure C Funds will be by way of offset against quarterly payments due to Medical Center from City. (b) Medical Center may. at any time. make additional payments to the City to repay the Obligations from Measure C Funds or from any other source of available and permissible funds, as established by the CMS and DHCS. of the Medical Center.
The unpaid balance of the Obligations shall be paid in full on the last day of the eighteenth full month following the Disbursement Date from any source of available and permissible funds, as established by the C'MS and DHCS. of the Medical C'enter.
Section 4. Administrative Fee: Payment of City's Attorneys Foes. To reimburse City for additional costs relating to administering the Advance Payment, including the loss of earnings relating to City's advancing of the Advance Payment pursuant to the IGT Agreement. City shall assess a fee equal to (i) four and one-half percent (4.5%) of the Advance Payment disbursed on the Disbursement Date and (ii) two and one-quarter percent (2.25%) of the amount of the Obligations outstanding as of the first anniversary of the Disbursement Date. The Administrative Fee shall be paid in the same manner as the repayment of the Obligations as set forth in Section 3. Except for the Administrative Fee, and subject to Section 11. the City shall at no time charge, nor shall the Medical Center be obligated to pay, interest on or any other charge relating to the use of the Advance Payment. Medical Center shall pay or reimburse Best. Best & Krieger directly for the City's attorneys' fees incurred in connection with the preparation and negotiation of this Agreement and the transactions contemplated hereby within sixty (60) days of receipt of an invoice for such fees. In the event Medical Center fails to pay the City's attorneys' fees as provided herein.
Medical Center hereby authorizes City to apply any Measure C funds now or hereafter in the possession of the City to the payment of such attorneys" fees.
Section 5. Application of Payments. All repayments of the Obligations shall be made to City in U.S. dollars. All payments received by City will be applied first to payment of the Administrative Fee. second to the repayment of the Advance Payment. and third, to the payment 3 of' any other amounts due under this Agreement. After the occurrence and during the continuance of'an of an Event of Default, the City may apply any payments to the Obligations owing under this Agreement in any order determined by City.
Section 6. Security Interest. To the extent permitted by law. Medical Center hereby grants and assigns to City a security interest in all of Medical Center's right, title. and interest in all accounts and receivables relating to Measure C Funds. including any rights to the payment of such Measure C Funds, and all proceeds thereof (the "Collateral"). to secure prompt repayment of any and all Obligations in accordance with the terms and conditions of this Agreement and to secure prompt performance by Medical Center of each of its covenants and duties under this Agreement. Medical Center authorizes City to file UCC-1 financing statements as may be necessary to perfect the security interest contemplated by this Agreement, and any continuation statement or amendment with respect thereto, in the appropriate filing office without the signature of Medical Center where permitted by applicable law.
Section 7. Representations and Warranties. As an inducement to City to execute this Agreement and to disburse the Advance Payment, Medical C'enter represents and warrants to City that the following statements set forth in this Section are true, correct and complete in all material respects as of the date hereol and will be true. correct and complete in all material respects until the Advance Payment is paid in full:
(a) Medical Center is duly incorporated, formed or organized and validly existing under the laws of the state of its incorporation, formation or organization, and is qualified to transact business in the State of California and in each jurisdiction where it is required to conduct its operations, and is in good standing in the State of California:
The execution. delivery and performance of this Agreement by Medical C'enter are within the Medical Center's powers and have been duly authorized by all necessary action by Medical Center;
(c) This Agreement has been duly evecuted by Medical C'enter. and is a legally valid and binding obligation of Medical Center, enforceable against Medical Center in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization. moratorium or similar laws affecting creditors rights generally and by general principles of equity; The execution, delivery and performance of this Agreement by Medical Center will not violate (i) Medical Center's articles of incorporation or bylaws; (ii) any legal requirement affecting Medical Center or any of its properties; or (iii) any agreement to which Medical Center is bound or to which it is a party:
(e) To Medical Center's knowledge, Medical Center is in material compliance with all laws, regulations, rulings, orders. injunctions, decrees, conditions or other requirements applicable to or imposed upon Medical Center by any law or by any Governmental Authority. Borrower has filed all required tax returns and reports (or filed appropriate extensions therefore that are now required to be filed by it in connection with any federal, state and local tax, duty or charge levied, assessed or imposed upon Medical Center or its assets, including unemployment. social security. and real estate taxes. Medical Center has paid all taxes which are now due and payable. No taxing authority has asserled or assessed any additional tax liabilities against Medical Center which are 4 outstanding on this date, and Medical Center has not filed for any extension of time for the payment of'any tax or the filing of any tax return or report: and No Insolvency Proceeding of any character, including, without limitation. bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Medical Center or any of its assets or properties. is pending or. 1o the knowledge of the Medical Center, threatened. The Medical Center has not taken any action in contemplation of, or that would constitute the basis for. the institution of any such Insolvency Proceedings.
Section 8. Covenants of Medical C'enter.
Restriction on Transfers. Medical Center shall not sell. assign or otherwise transfer any interest in the Lease or any portion of the Medical Facility except in striet accordance with the terms of the Lease.
No Additional Liens on Collateral. Medical C'enter shall not grant. create, permit. assume or suffer to exist any mortgage, pledge, lien, encumbrance, charge, or security interest in or upon the Collateral.
Financial Reporting. The Medical Center shall maintain a system of accounting in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied and shall provide to the City:
with respect to each fiscal year of the Medical Center. commencing with fiscal year ending June 30, 2025, a copy of audited financial statements of Medical Center for that period, which financial statements have been audited by an independent certified public accountant. to be delivered to the City within 30 days of the Board of Directors of the Medical C'enter approval thereof: including a balance sheet, statement of operations, statement of cash flows and accompanying auditors opinion report and footnotes; (11) at the election of the City (which election may be changed from time to time upon written notice from the City to the Medical Center), copies of Medical Center's monthly or quarterly financial statements (as elected by the City). including balance sheet and income statements, by no later than 30 days after the end of each applicable period; and (III) notice within thirty (30) business days of' any material adverse change in any of the following:
A. operating income;
B. balance sheet position;
C. key service line closure:
D. legal or regulatory non-compliance; or
E. senior leadership departure (e.g., CEO or CFO).
(IV) promptly upon City's request, all other books, records, statements. lists of property and accounts, budgets, forecasts, reports, records or other information perlaining to the condition or operations of the Medical Center as requested by City. 5 (d) Medical Center shall cause senior management of the Medical Center to meet with the city manager of the City (or his/her designee) on a monthly basis to discuss and update the City regarding the status of'any future plans for the Medical Facility, including. but not limited to, any proposed sale. affiliation or change of ownership of the Medical Center.
Medical Center shall comply or cause compliance in all material respects with all laws, regulations, rulings, orders, injunctions, decrees, conditions or other requirements applicable to or imposed upon Medical Center by any law or by any Governmental Authority, court or agency governing the use and operation of its Medical Facility. Evidence of such compliance shall bo submitted to City on request.
(f) The Medical Center shall (i) maintain all licenses. permits. accreditations. and certifications required by federal and California law to operate an acute care hospital and associated clinics; (ii) operate in accordance with all applicable C'MS Conditions of Participation, California Department of Public Health (CDPH) licensing requirements. and DHCS regulations: and (iii) comply with all programmatic requirements for continued participation in the Voluntary Rate Range IT Program. including accurate encounter reporting, attestation submissions, and cost reporting.
(g) Medical Center shall not (i) change its corporate structure, (ii) merge or consolidate with any entity, or undergo any statutory division, or (iii) amend or change any organizational or governing document binding upon it on the Effective Date.
Section 9. Event of Default. The occurrence of any of the following shall be deemed to be a delault hereunder (cach an "Event of Delault"'):
(a) failure by Medical Center to pay any monctary amount when due under this Agreement:
(b) any representation or warranty in this Agreement is materially incorrect or misleading when made or provided:
any other default or breach of any of the terms, provisions, and obligations of the Medical Center pursuant to this Agreement. and such default or breach is not cured by Medical Center within thirty (30) days from the receipt of written notice thereof from City: or the Medical C'enter ceases to be an organization described in Section 501(c)(3) ol the Internal Revenue Code:
an Insolvency Proceeding is initiated by Medical Center; or any Insolvency Proceeding initiated against Medical Center by another Person is not discharged within 60 days after filing;
bicable notice heape or ure period set foreten aur condition of the leas bevond any applicable notici
any default in the payment or performance of any material term or condition of any credit agreement. note, security agreement. mortgage, deed of trust, deed to secure debt. or other agreement or instrument evidencing or securing any other indebtedness, liabilities or obligations of Medical Center (beyond any applicable notice, grace or cure period set forth therein).
Section 10. Remedies. Notwithstanding any provision to the contrary herein, during a continuance of any Event of Default under this Agreement, City shall. at its option. have the following remedies: (a) declare the outstanding balance of the Advance Payment to be immediately due and payable without presentment, demand, protest or notice of any kind, (b) apply any Measure C Funds now or hereafter in the possession of the City to the payment of the Obligations, and (c) exercise all rights and remedies available to it under this Agreement or under applicable law; except that upon an actual or deemed entry of an order for relief with respect to Medical Center in any Insolvency Proceeding, all Obligations shall automatically become due and payable, without presentment. demand, protest or any notice of any kind, all of which are expressly waived by Medical C'onter.
Section I. Interest on Past Due Obligations. Except as otherwise expressly provided in this Agreement, any amount due from Medical Center to City hereunder which is not paid when duc shall bear interest at the rate of 10% per annum from the date such payment is due until the date paid
Section 12. Indemnification. The Medical Center agrees to indemnily. defend and hold the Cily, and its council members, officers, employees and agents (colleclively the "Indemnified Persons") harmless from any and against any loss. liability, obligation, damage, penalty, judgment. claim, deficiency, expense, interest, penalties, attorneys fees (including the fees and expenses of attorneys engaged by the Indemnified Person at the Indemnified Person's reasonable discretion) and amounts paid in settlement (collectively. "Claims") to which any Indemnified Person may become subject arising out of or relating to this Agreement. including, but not limited to, the City's making of the Advance Payment or the application of Measure C Funds to the repayment of the Advance Payment. except 1o the limited extent that the Claims are proximately caused by the Indemnified Person's gross negligence or willful misconduct. The indemnification provided for in this section shall survive the termination of this Agreement and shall not be affecled by the presence, absence or amount of'or the payment or nonpayment of any Claim under any insurance.
Section 13. Termination. Upon the payment in full of all of the Obligations of Client under this Agreement, this Agreement shall terminate, except as to any provisions or obligations which expressly stated as surviving the termination of this Agreement.
Section 14. Assignment. Medical Center shall not assign or transfer this Agreement. directly or indirectly, by operation of'law or otherwise, without the prior written consent of City. which consent may be withheld or granted in City's sole and absolute discretion. Any attempt to do so without such written consent of City shall be null and void.
Section 15. Notices. All notices required or permitted to be given by this Agreement shall he in writing and may be delivered personally, by certified or registered U.S. Postal Service mail. return receipt requested, postage prepaid, or by U.S. Postal Service Express mail, Federal Express or other overnight courier that guarantees next day delivery, and shall be deemed sufficiently given if served in the manner specified in this Section. Notices shall be delivered or mailed to the parties at the acresses set forth beneath their respective names on the signature page of this Agreement. Each party may change its address by giving notice as provided in this Section. Notices given by certified 7 or registered mail. return receipt requested. shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark date. Notices delivered by U.S. Postal Service Express mail, Federal Express or overnight courier that guarantees next day delivery shall he deemed given twenty-four (24) hours after delivery of the notice to the U.S. Postal Service.
Pederal Express or overnight courier.
Section 16. Miscellancous.
Waiver. A waiver by either Party of any breach, or of any term, covenant. or condition contained herein, shall not he deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein. whether of the same of a different character.
Entire Agreement. This Agreement represents the full and complete understanding of'every kind or nature whatsoever between the Parties with respect to its subject matter, and all preliminary negotiations and agreements of whatsoever kind or nature relating to the same are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein.
Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either Party by reason of the authorship of the Agreement or any other rule of improvements which might otherwisc apply.
Amendment. This Agreement may be modified or amended only by a written document executed by both Medical Center and City.
E. Severability: If any term or provision of this Agreement is held to be invalid. illegal, or otherwise unenforceable by a court of competent jurisdiction. the remaining provisions of this Agreement shall continue in full force and effect. y. construction. interpretation and enforcement of thi
greement will boverined the as of construct incre
Prevailing Parties. If either Party becomes involved in arbitration or litigation arising from this agreement of the performance or interpretation of it the arbitrator. court or tribunal in such arbitration or litigation or in a separate suit shall award reasonable costs and expenses of arbitration and litigation. including expert witness fees and attorney fees. to the prevailing Party or Parties.
(Signatures on Following Page]
8 IN WITNESS WHEREOF. the Parties have caused this Agreement to be executed as of its Effective Date.
Medical Center: CITY:
AVALON MEDICAL DEVELOPMENT CITY OF AVALON
CORPORATION
By: By:
Signature Signature
Printed Name Printed Name
Date Date
Address for Notices: Address for Notices:
Avalon Medical Development Corporation City of Avalon
100 Falls Canyon Rd 410 Avalon Canyon Road
Avalon. CA 90704 Avalon, CA 90704
Attn: Attn:
EXHIBIT A
REPAYMENT SCHEDULE
Date Payment Amoun
April 1, 2026 Amount equal to Measure C' funds received or payable to Medical C'enter with respect to the first calendar quarter of 2026
July 1.2026 Amount equal to Measure C' funds received or payable to Medical C'enter with respect to the second calendar quarter of 2026
October 1, 2026 Amount equal to Measure C' funds received or payable lo Medical Center with respect to the third calendar quarter of 2026
January 1, 2027 Amount equal to Measure C' funds received or payable to Medical C'enter with respect to the fourth calendar quarter of 2026
Last Day of the Eighteenth All remaining and outstanding amounts owing to Cily Full Month Following the pursuant to this Agreement
Disbursement Date
10