Capital Cost
FY2027 Budget
$250K
Total Budget (all years)
$250K
Project Total
$250K
Funding Sources
FY2027 Budget
$250K
Total Budget (all years)
$250K
Project Total
$250K
Detailed Breakdown
Category Historical Actuals Estimated Actuals
FY2027
In Progress
Future Budgeted Total
Construction/Maintenance $0 $0 $250,000 $0 $250,000
Total $0 $0 $250,000 $0 $250,000
Detailed Breakdown
Category
FY2027
In Progress
Funding Source 1 $250,000
Total $250,000
Park Landscaping Improvements
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 274 Appendix
Appendix
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 275 Glossary
Abatement: A reduction or elimination of a real or personal property tax, motor vehicle excise, a fee, charge, or special assessment imposed by a governmental unit. Granted only on application of the person seeking the abatement and only by the committing governmental unit.
Accounting System: The total structure of records and procedures that identify record, classify, and report information on the financial position and operations of a governmental unit or any of its funds, account groups, and organizational components.
Accrued Interest: The amount of interest that has accumulated on the debt since the date of the last interest payment, and on the sale of a bond, the amount accrued up to but not including the date of delivery (settlement date). (See Interest)
ACFR: Annual Comprehensive Financial Report - A detailed report of an organization's financial activities and performance over the fiscal year.
Amortization: The gradual repayment of an obligation over time and in accordance with a predetermined payment schedule.
Appropriation: A legal authorization from the community's legislative body to expend money and incur obligations for specific public purposes. An appropriation is usually limited in amount and as to the time period within which it may be expended.
Arbitrage: As applied to municipal debt, the investment of tax-exempt bonds or note proceeds in higher yielding, taxable securities. Section 103 of the Internal Revenue Service (IRS) Code restricts this practice and requires (beyond certain limits) that earnings be rebated (paid) to the IRS.
Assessed Valuation: A value assigned to real estate or other property by a government as the basis for levying taxes.
Assets: Items owned by an organization that have economic value, such as cash, investments, property, and equipment.
Audit: An examination of a community's financial systems, procedures, and data by a certified public accountant (independent auditor), and a report on the fairness of financial statements and on local compliance with statutes and regulations. The audit serves as a valuable management tool in evaluating the fiscal performance of a community.
Audit Report: Prepared by an independent auditor, an audit report includes: (a) a statement of the scope of the audit; (b) explanatory comments as to application of auditing procedures; (c) findings and opinions. It is almost always accompanied by a management letter which contains supplementary comments and recommendations.
Available Funds: Balances in the various fund types that represent non-recurring revenue sources. As a matter of sound practice, they are frequently appropriated to meet unforeseen expenses, for capital expenditures or other onetime costs.
Balance Sheet: A statement that discloses the assets, liabilities, reserves and equities of a fund or governmental unit at a specified date.
Betterments (Special Assessments): Whenever a specific area of a community receives benefit from a public improvement (e.g., water, sewer, sidewalk, etc.), special property taxes may be assessed to reimburse the governmental entity for all or part of the costs it incurred. Each parcel receiving benefit from the improvement is assessed for its proportionate share of the cost of such improvements. The proportionate share may be paid in full or the property owner may request that the assessors apportion the betterment over 20 years. Over the life of the Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 276 betterment, one year’s apportionment along with one year’s committed interest computed from October 1 to October 1 is added to the tax bill until the betterment has been paid.
Bond: A means to raise money through the issuance of debt. A bond issuer/borrower promises in writing to repay a specified sum of money, alternately referred to as face value, par value or bond principal, to the buyer of the bond on a specified future date (maturity date), together with periodic interest at a specified rate. The term of a bond is always greater than one year. (See Note)
Bond and Interest Record: (Bond Register) – The permanent and complete record maintained by a treasurer for each bond issue. It shows the amount of interest and principal coming due each date and all other pertinent information concerning the bond issue.
Bonds Authorized and Unissued: Balance of a bond authorization not yet sold. Upon completion or abandonment of a project, any remaining balance of authorized and unissued bonds may not be used for other purposes, but must be rescinded by the community's legislative body to be removed from community's books.
Bond Issue: Generally, the sale of a certain number of bonds at one time by a governmental unit.
Bond Rating (Municipal): A credit rating assigned to a municipality to help investors assess the future ability, legal obligation, and willingness of the municipality (bond issuer) to make timely debt service payments. Stated otherwise, a rating helps prospective investors determine the level of risk associated with a given fixed-income investment.
Rating agencies, such as Moody's and Standard and Poors, use rating systems, which designate a letter or a combination of letters and numerals where AAA is the highest rating and C1 is a very low rating.
Budget: A plan for allocating resources to support particular services, purposes and functions over a specified period of time. (See Performance Budget, Program Budget)
Capital Assets: All real and tangible property used in the operation of government, which is not easily converted into cash, and has an initial useful live extending beyond a single financial reporting period. Capital assets include land and land improvements; infrastructure such as roads, bridges, water and sewer lines; easements; buildings and building improvements; vehicles, machinery and equipment. Communities typically define capital assets in terms of a minimum useful life and a minimum initial cost. (See Fixed Assets) Capital Budget: An appropriation or spending plan that uses borrowing or direct outlay for capital or fixed asset improvements. Among other information, a capital budget should identify the method of financing each recommended expenditure, i.e., tax levy or rates, and identify those items that were not recommended. (See Capital Assets, Fixed Assets)
Cash: Currency, coin, checks, postal and express money orders and bankers’ drafts on hand or on deposit with an official or agent designated as custodian of cash and bank deposits.
Cash Flow: The movement of money into or out of an organization, showing its liquidity and ability to meet financial obligations.
Cash Management: The process of monitoring the ebb and flow of money in an out of municipal accounts to ensure cash availability to pay bills and to facilitate decisions on the need for short- term borrowing and investment of idle cash.
Certificate of Deposit (CD): A bank deposit evidenced by a negotiable or non-negotiable instrument, which provides on its face that the amount of such deposit plus a specified interest payable to a bearer or to any specified person on a certain specified date, at the expiration of a certain specified time, or upon notice in writing.
Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 277 Classification of Real Property: Assessors are required to classify all real property according to use into one of four classes: residential, open space, commercial, and industrial. Having classified its real properties, local officials are permitted to determine locally, within limitations established by statute and the Commissioner of Revenue, what percentage of the tax burden is to be borne by each class of real property and by personal property owners.
Collective Bargaining: The process of negotiating workers' wages, hours, benefits, working conditions, etc., between an employer and some or all of its employees, who are represented by a recognized labor union, regarding wages, hours and working conditions.
Compliance: Adherence to relevant laws, regulations, and internal policies governing financial reporting and operations.
Consumer Price Index: The statistical measure of changes, if any, in the overall price level of consumer goods and services. The index is often called the "cost-of-living index." Cost-Benefit Analysis: A decision-making tool that allows a comparison of options based on the level of benefit derived and the cost to achieve the benefit from different alternatives.
Debt Burden: The amount of debt carried by an issuer usually expressed as a measure of value (i.e., debt as a percentage of assessed value, debt per capita, etc.). Sometimes debt burden refers to debt service costs as a percentage of the total annual budget.
Debt Service: The repayment cost, usually stated in annual terms and based on an amortization schedule, of the principal and interest on any particular bond issue.
Encumbrance: A reservation of funds to cover obligations arising from purchase orders, contracts, or salary commitments that are chargeable to, but not yet paid from, a specific appropriation account.
Enterprise Funds: An enterprise fund is a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. It allows a community to demonstrate to the public the portion of total costs of a service that is recovered through user charges and the portion that is subsidized by the tax levy, if any. With an enterprise fund, all costs of service delivery — direct, indirect, and capital costs — are identified. This allows the community to recover total service costs through user fees if it chooses. Enterprise accounting also enables communities to reserve the "surplus" or net assets unrestricted generated by the operation of the enterprise rather than closing it out to the general fund at year-end. Services that may be treated as enterprises include, but are not limited to, water, sewer, hospital, and airport services.
Equalized Valuations (EQVs): The determination of the full and fair cash value of all property in the community that is subject to local taxation.
Equity: The residual interest in the assets of an organization after deducting liabilities, representing the owners' stake in the business.
Estimated Receipts: A term that typically refers to anticipated local revenues often based on the previous year's receipts and represent funding sources necessary to support a community's annual budget. (See Local Receipts) Exemptions: A discharge, established by statute, from the obligation to pay all or a portion of a property tax. The exemption is available to particular categories of property or persons upon the timely submission and approval of an application to the assessors. Properties exempt from taxation include hospitals, schools, houses of worship, and cultural institutions. Persons who may qualify for exemptions include disabled veterans, blind individuals, surviving spouses, and seniors.
Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 278 Expenditure: An outlay of money made by municipalities to provide the programs and services within their approved budget.
Fiduciary Funds: Repository of money held by a municipality in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and other funds. These include pension (and other employee benefit) trust funds, investment trust funds, private- purpose trust funds, and agency funds.
Financial Statements: Reports summarizing an organization's financial activities and position, including the balance sheet, income statement, and cash flow statement.
Fiscal Year: The 12-month period for which an organization plans the use of its funds, typically not the same as the calendar year.
Fixed Assets: Long-lived, assets such as buildings, equipment and land obtained or controlled as a result of past transactions or circumstances.
Fixed Costs: Costs that are legally or contractually mandated such as retirement, FICA/Social Security, insurance, debt service costs or interest on loans.
Float: The difference between the bank balance for a local government’s account and its book balance at the end of the day. The primary factor creating float is clearing time on checks and deposits. Delays in receiving deposit and withdrawal information also influence float.
Full Faith and Credit: A pledge of the general taxing powers for the payment of governmental obligations. Bonds carrying such pledges are usually referred to as general obligation or full faith and credit bonds.
Fund: An accounting entity with a self-balancing set of accounts that are segregated for the purpose of carrying on identified activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations.
Fund Accounting: Organizing financial records into multiple, segregated locations for money. A fund is a distinct entity within the municipal government in which financial resources and activity (assets, liabilities, fund balances, revenues, and expenditures) are accounted for independently in accordance with specific regulations, restrictions or limitations. Examples of funds include the general fund and enterprise funds. Communities whose accounting records are organized according to the Uniform Municipal Accounting System (UMAS) use multiple funds.
GAAP: Generally Accepted Accounting Principles - Standard accounting principles, standards, and procedures that companies use to compile their financial statements.
GASB 34: A major pronouncement of the Governmental Accounting Standards Board that establishes new criteria on the form and content of governmental financial statements. GASB 34 requires a report on overall financial health, not just on individual funds. It requires more complete information on the cost of delivering value estimates on public infrastructure assets, such as bridges, road, sewers, etc. It also requires the presentation of a narrative statement the government's financial performance, trends and prospects for the future.
GASB 45: This is another Governmental Accounting Standards Board major pronouncement that each public entity account for and report other postemployment benefits in its accounting statements. Through actuarial analysis, municipalities must identify the true costs of the OPEB earned by employees over their estimated years of actual service.
General Fund: The fund used to account for most financial resources and activities governed by the normal appropriation process.
Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 279 General Obligation Bonds: Bonds issued by a municipality for purposes allowed by statute that are backed by the full faith and credit of its taxing authority.
Governing Body: A board, committee, commission, or other executive or policymaking body of a municipality or school district.
Indirect Cost: Costs of a service not reflected in the operating budget of the entity providing the service. An example of an indirect cost of providing water service would be the value of time spent by non-water department employees processing water bills. A determination of these costs is necessary to analyze the total cost of service delivery. The matter of indirect costs arises most often in the context of enterprise funds.
Internal Controls: Policies and procedures implemented by an organization to ensure the reliability of financial reporting and compliance with laws and regulations, aiming to prevent fraud and errors.
Interest: Compensation paid or to be paid for the use of money, including amounts payable at periodic intervals or discounted at the time a loan is made. In the case of municipal bonds, interest payments accrue on a day-to-day basis, but are paid every six months.
Interest Rate: The interest payable, expressed as a percentage of the principal available for use during a specified period of time. It is always expressed in annual terms.
Investments: Securities and real estate held for the production of income in the form of interest, dividends, rentals or lease payments. The term does not include fixed assets used in governmental operations.
Liabilities: Debts or obligations owed by an organization, including loans, accounts payable, and accrued expenses.
Line Item Budget: A budget that separates spending into categories, or greater detail, such as supplies, equipment, maintenance, or salaries, as opposed to a program budget.
Local Aid: Revenue allocated by the state or counties to municipalities and school districts.
Maturity Date: The date that the principal of a bond becomes due and payable in full.
Municipal(s): (As used in the bond trade) "Municipal" refers to any state or subordinate governmental unit. "Municipals" (i.e., municipal bonds) include not only the bonds of all political subdivisions, such as cities, towns, school districts, special districts, counties but also bonds of the state and agencies of the state.
Net Income: The difference between an organization's revenues and expenses, representing its profit or loss for a specific period.
Note: A short-term loan, typically with a maturity date of a year or less.
Objects of Expenditures: A classification of expenditures that is used for coding any department disbursement, such as “personal services,” “expenses,” or “capital outlay.” Official Statement: A document prepared for potential investors that contains information about a prospective bond or note issue and the issuer. The official statement is typically published with the notice of sale. It is sometimes called an offering circular or prospectus.
Operating Budget: A plan of proposed expenditures for personnel, supplies, and other expenses for the coming fiscal year.
Overlapping Debt: A community's proportionate share of the debt incurred by an overlapping government entity, such as a regional school district, regional transit authority, etc.
Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 280 Performance Budget: A budget that stresses output both in terms of economy and efficiency.
Principal: The face amount of a bond, exclusive of accrued interest.
Program: A combination of activities to accomplish an end.
Program Budget: A budget that relates expenditures to the programs they fund. The emphasis of a program budget is on output.
Proprietary Funds: Funds used to record the financial transactions of governmental entities when they engage in activities that are intended to recover the cost of providing goods or services to the general public on a user-fee basis.
Purchased Services: The cost of services that are provided by a vendor.
Refunding of Debt: Transaction where one bond issue is redeemed and replaced by a new bond issue under conditions generally more favorable to the issuer.
Reserve Fund: An amount set aside annually within the budget of a town to provide a funding source for extraordinary or unforeseen expenditures.
Revaluation: The assessors of each community are responsible for developing a reasonable and realistic program to achieve the fair cash valuation of property in accordance with constitutional and statutory requirements. The nature and extent of that program will depend on the assessors’ analysis and consideration of many factors, including, but not limited to, the status of the existing valuation system, the results of an in-depth sales ratio study, and the accuracy of existing property record information.
Revenues: Inflows of resources or other enhancements of assets of an organization, usually from sales of goods or services.
Revenue Anticipation Note (RAN): A short-term loan issued to be paid off by revenues, such as tax collections and state aid. RANs are full faith and credit obligations.
Revenue Bond: A bond payable from and secured solely by specific revenues and thereby not a full faith and credit obligation.
Revolving Fund: Allows a community to raise revenues from a specific service and use those revenues without appropriation to support the service.
Sale of Real Estate Fund: A fund established to account for the proceeds of the sale of municipal real estate other than proceeds acquired through tax title foreclosure.
Stabilization Fund: A fund designed to accumulate amounts for capital and other future spending purposes, although it may be appropriated for any lawful purpose.
Surplus Revenue: The amount by which cash, accounts receivable, and other assets exceed liabilities and reserves.
Tax Rate: The amount of property tax stated in terms of a unit of the municipal tax base; for example, $14.80 per $1,000 of assessed valuation of taxable real and personal property.
Tax Title Foreclosure: The procedure initiated by a municipality to obtain legal title to real property already in tax title and on which property taxes are overdue.
Trust Fund: In general, a fund for money donated or transferred to a municipality with specific instructions on its use.
As custodian of trust funds, the treasurer invests and expends such funds as stipulated by trust agreements, as Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 281 directed by the commissioners of trust funds or by the community's legislative body. Both principal and interest may be used if the trust is established as an expendable trust. For nonexpendable trust funds, only interest (not principal) may be expended as directed.
Uncollected Funds: Recently deposited checks included in an account’s balance but drawn on other banks and not yet credited by the Federal Reserve Bank or local clearinghouse to the bank cashing the checks. (These funds may not be loaned or used as part of the bank’s reserves and they are not available for disbursement.) Undesignated Fund Balance: Monies in the various government funds as of the end of the fiscal year that are neither encumbered nor reserved, and are therefore available for expenditure once certified as part of free cash.
Unreserved Fund Balance (Surplus Revenue Account): The amount by which cash, accounts receivable, and other assets exceed liabilities and restricted reserves. It is akin to a "stockholders’ equity" account on a corporate balance sheet. It is not, however, available for appropriation in full because a portion of the assets listed as "accounts receivable" may be taxes receivable and uncollected. (See Free Cash) Valuation (100 Percent): The legal requirement that a community’s assessed value on property must reflect its market, or full and fair cash value.
Glossary
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 282 Financial Policies
Financial Policies
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 283 Accounting and Financial Reporting
Purpose:
The purpose of this policy is to ensure the proper recording of financial transactions and identify the parties responsible for financial reporting.
Background:
The City’s Annual Comprehensive Financial Report (ACFR) presents the government and its component units (entities for which the government is considered to be financially accountable) financial and operating activities. The City's blended component units, although legally separate entities, are, in substance, part of the City's operations and financial data from these units are combined with data of the City. The City’s financial statements and accounting records are maintained in accordance with the recommendations of the Governmental Accounting Standards Board (GASB).
The government-wide financial statements report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, normally supported by taxes and inter-governmental revenues, are reported separately from business-type activities that rely, to a significant extent, on fees and charges for support.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the providers have been met. As a general rule, the effect of inter-fund activity has been eliminated from the government-wide financial statements. Direct expenses have not been eliminated from the functional categories; however, indirect expenses and internal payments have been eliminated.
Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than program revenues. Likewise, general revenues include all taxes.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences are recorded only when payment is due.
Taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and are therefore recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered measurable and available only when the City receives cash.
The City reports the following governmental fund types:
General Fund has been classified as a major fund and is used to account for resources traditionally associated with governments which are not required legally or by sound financial management to be accounted for in another fund.
Accounting and Financial Reporting
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 284 Special Revenue Funds account for proceeds of specific revenue sources that are legally restricted or otherwise designated for specific purposes.
Nonmajor Funds is the aggregate of all the other government funds.
The City reports the following proprietary funds:
Harbor Fund has been classified as an enterprise fund and is used to account for all harbor operations Sewer Fund has been classified as an enterprise fund and is used to account for the fees and services for the operation and maintenance of sewer system.
Saltwater Fund has been classified as an enterprise fund and is used to account for the operation of the City’s saltwater pumping plants and systems.
Solid Waste Fund has been classified as an enterprise fund and is used to account for the solid waste collection and disposal costs.
General Administration, Insurance, and Vehicle Maintenance have been classified as internal service funds and are used to account for operations that provide services to other departments of the City on a cost reimbursement basis.
Additionally, the City reports its Success Agency activity in a Private-Purpose Trust Fund.
Policy:
Each year an audit will be conducted by an independent Certified Public Accountant Firm (CPA Firm). The selection of the independent CPA Firm shall be in conformance with the City’s professional services bidding procedures. Generally, the City shall request bids for audit services no less frequently than every five years. The CPA Firm shall provide the City Council with an Audit Communication Letter addressing significant findings of the auditors in conjunction with their opinion on the City’s Annual Comprehensive Financial Report. These reports shall be submitted to the City Council within 60 days of receipt of the report.
During the annual budget process, the City will make available a preliminary year end, unaudited, General Fund fund balance. It should be recognized, however, that the balance provided is subject to both unforeseen financial transactions of a material nature and subject to findings of the independent audit. An audit verified year-end balance should be available by the end of December. The City will use generally accepted accounting principles in preparing its annual financial statements, and will strive to meet the requirements of the GFOA’s Award for Excellence in Financial Reporting program.
Accounting and Financial Reporting
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 285 Budget Process
Purpose:
The purpose of this policy is to establish guidelines for the preparation, adoption, and presentation of the City’s annual budget.
Background:
The City of Avalon operates on a fiscal year basis, starting July 1 and ending June 30. The budget is prepared by the Finance Department with the support of each operating department under the direct supervision of the City Manager. The Finance Department is responsible for coordinating all revenues estimates contained in the budget.
Estimates are reached by analyzing historical revenue history, national and local economic trends and indices, and development patterns in the local economy. The Finance Department also coordinates the development of the expenditure budgets with the support of each operating department and the City Manager.
The budget is structured to separate operating and capital activity at the fund and department level. The operating budget is a guide for the receipt and disbursement of funds used to provide daily, routine public services to the community. The operating budget is structured to include historical budget and actual revenues and expenditures, along with the current revenue estimates and proposed expenditures required in order to implement and maintain services to the community. The Capital Improvement Program (CIP) budget details the acquisition, construction, or rehabilitation of major capital facilities and infrastructure over a ten year period.
Policy:
The proposed budget is to be presented to the City Council and community in public workshop meetings in May or June for review, public input, and deliberation. After providing opportunities for public review and discussion at City Council workshops and City Council meetings, the budget is adopted by the City Council prior to June 30 at either a regular or special City Council Meeting. The City Council may amend or supplement the budget at any time after its adoption by majority vote of the Council Members.
The budget document should incorporate the following guidelines to facilitate broader consumption and greater comprehension. The document should be organized in a manner that reduces redundancy and allows for a logical flow of information. The budget document should include an introduction and overview, financial summaries, operating and capital detail, departmental information, and a glossary. The document should avoid excessive detail, which can distract from the primary points presented, and should present the information in a consistent manner across departments and budget years.
Budget Process
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 286 Structurally Balance Budget
Purpose:
The purpose of this policy is to establish guidelines for the City’s operating funds aimed at achieving and maintaining a structurally balanced budget. State law requires that the City adopts a balanced budget. However, a budget that is balanced by the state’s definition may not necessarily be structurally balanced or sustainable if recurring expenditures are covered by reserves or non-recurring or highly volatile revenues. This policy supports the on-going financial stability of the City by advancing a more sustainable definition of a balanced budget – a structurally balanced budget.
Background:
This section defines key terms related to a structurally balanced budget:
Recurring Revenues are the portion of the City’s revenues that can reasonably be predicted to continue year-to-year, with some degree of predictability. Property taxes are an example of a recurring revenue. Non-recurring Revenue are revenues that are one-time in nature and cannot be reasonably expected to continue year-to-year.
Some revenue sources may have both recurring and non-recurring components. These sources require the City to exercise judgment in determining how much of the source is truly recurring. For example, the City regularly receives transfer fees for the sale of moorings in the harbor; however, the amount received varies year-to-year based on the value of moorings and number of sales. In this case, it may be prudent to regard unusually high transfer revenues as non-recurring revenue under the assumption that such revenues are unlikely to continue, making it imprudent to use them for recurring expenditures.
Recurring expenditures appear in the budget each year. Salaries, benefits, rent, utilities, maintenance costs and certain contracted services are common examples of recurring expenditures. In general, recurring expenditures should be those that the City expects to fund every year in order to maintain current service levels. Non-recurring expenditures comprise special projects such as capital improvements, asset acquisitions, and other costs incurred infrequently by the City. In general, the City has a greater degree of flexibility to defer non-recurring expenditures than recurring ones.
Reserves are the portion of fund balance set aside as a hedge against risk. The City has defined a minimum amount of funds it will hold in reserve. This serves as a “bottom line measure” to help determine the extent to which the City’s structural balance policy is being met – if reserves are maintained at their desired levels, it is an indication that the City is maintaining a structurally balanced budget. If reserves are declining, it may indicate an imbalance in the budget (e.g. if reserves are being used to fund on-going expenditures). Desired reserve levels are further discussed in Sections F and G of this document.
Policy:
The City shall endeavor to adopt a structurally balanced budget. Generally, this means that recurring expenditures should be covered by recurring revenues and that non-recurring revenues should be used to fund non-recurring expenditures. The Finance Department shall incorporate information into its budget presentation demonstrating the City’s progress in achieving a structurally balanced budget.
In order to achieve a structurally balanced budget, the City should consider the following:
Employee compensation and non-recurring revenues – With limited exceptions, non-recurring revenues and reserves should not be used to fund employee compensation. One such exception might be a severe economic downturn where non-recurring revenues are temporarily used to ease the transition to an expenditure structure Structurally Balanced Budget
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 287 that is in line with new economic realities. Even this should only be done in the context of a plan to return to structural balance and replenish any reserves that had been used.
Operating and maintenance costs of capital assets purchased with non-recurring revenues – While capital assets are often funded with non-recurring revenues, the City shall be observant of the long-term operating and maintenance costs of such purposes, to prevent the creation of new on-going expenditures that cannot be maintained by recurring revenues.
Replacement of short-lived assets and non-recurring revenues – The City shall prioritize the use of non-recurring revenues to replace current assets that have outlived their useful lives over the purchase of entirely new assets, where the replacement of the expired or obsolete assets is critical to the maintenance of the City’s core programs. A replacement schedule for such assets is a good indicator of when to budget for these items.
Structurally Balanced Budget
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 288 Revenue Policy
Purpose:
The purpose of this policy is to establish guidelines for (a) the development of revenue estimates, (b) fee structures, and (c) use of new recurring and non-recurring revenues in order to achieve a structurally balanced budget.
Background:
Revenue projections and assumptions are critical to budget decisions, particularly in order to achieve a structurally balanced budget. The Finance Department is responsible for coordinating all revenues estimates contained in the budget. Estimates are reached by analyzing historical revenue history, national and local economic trends and indices, and development patterns in the local economy. Many of the City’s key revenues are subject to significant fluctuation dependent on a number of economic factors. While it is difficult to always achieve accurate projections in a dynamic economic environment, it is important to have a consistent approach to projecting revenues in order for decisionmakers to understand the basis used to project the resources available for the budget. Revenue should be projected in a way that is not likely to lead to a revenue shortfall, but also not to be so conservative that the projections consistently and substantially underestimate revenues.
The City utilizes user charges and fees to help fund services. When certain services provided especially benefit a particular group, the City should consider charges and fees on the direct recipients of those that receive benefits for such services. The City may elect to subsidize a service for various reasons, including the ability of residents or businesses to pay; however, the City should have a documented rationale regarding why the full cost is not recovered.
By definition, non-recurring revenues cannot be relied upon in future budget periods. Non-recurring revenues include the sales of government assets, infrequent revenues from development and grants.
Policy:
The following guidelines are to be considered with regards to City revenues:
a. Development of Revenue Estimates - The City will estimate revenues using an objective and analytical process, with a conservative approach adopted to address any uncertainties. The approach should result in overall budgeted revenues for a fund being set at a level such that it is unlikely that actual revenues are lower than budgeted. The City should be transparent concerning its forecasting approach and underlying assumptions. b. Fee Structure - The City will comply with all applicable laws regarding the designation and assessment of fees for services and other fees. The City will calculate the full cost of providing a service in order to provide a basis for setting the charge or fee. The City will then identify whether it intends to set the fee at an amount to recover the full cost of providing the good or service or subsidize a portion of the cost. If the full cost of the good or service is not recovered, then an explanation of the rationale for not recovering the full amount should be provided to the public. The City should consider reviewing and updating charges and fees periodically based on factors such as the impact of inflation, other cost increases, adequacy of cost recovery, use of services, and competitiveness of current rates.
c. Use of New Recurring and Non-Recurring Revenues – Non-recurring revenues should be used to fund nonrecurring expenditures only. The City should dedicate new recurring revenue sources in the following manner and priority:
1. Fixed cost increases, including built-in contract escalators, and benefit increases outside of City control (e.g. annual unfunded pension liability contributions);
2. Replenishing reserves to established targets;
3. Funding significant long-term liabilities;
4. Replenishing internal service funds for vehicle replacement and deferred maintenance; and
5. Other discretionary expenditures and negotiable items.
Revenue Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 289 Revenue Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 290 Expenditure Controls
Purpose:
The purpose of this policy is to provide outline appropriation and expenditure controls designed to safeguard limited government assets and ensure that resources are maintained where they were originally approved during the budget process.
Background:
The budget document serves as a plan of financial operation, identifying adopted appropriations as well as the specific types and levels of services to be provided. Appropriations are made by City Council at the fund level, with expenditures grouped into the following major categories:
Personnel – Expenditures related to labor including salaries, overtime, worker’s compensation, health, insurance, and retirement benefits
Maintenance and Operations – Expenditures for items which primarily benefit the current period and are not defined as personnel, contract services, or capital outlays.
Contract Services – Expenditures rendered to a government by private firms, individuals, or other government agencies.
Capital Outlays – Expenditures that result in the acquisition of, or addition to, fixed assets that are tangible, durable, non-consumable, costs $5,000 or more, and have a useful life of more than one year.
Department heads and their designated representatives may authorize expenditures that are based on appropriations previously authorized by City Council action, generally through the adopted budget, and only from accounts under their organizational responsibility. Individual transactions are classified by departments at the account level, with the most appropriate account used to classify the expenditure. During the course of the year, departments may encounter necessary and unanticipated expenditures that are able to be covered through budget savings in other accounts under their control. These budget transfers allow the City to operate more efficiently with the implementation of controls to ensure the budget goals are still met with the approved appropriations.
Policy:
City Council approval is required for any budget revisions or amendments that increase the total amount appropriated by fund. Budget transfers require the following approvals and processes:
Transfers of Operating Expenditure Budgets
City Council approval is required for the following transfers:
Between personnel and non-personnel accounts within the same fund in excess of $10,000; Between departments or accounts within the same fund in excess of $50,000.
City Manager approval is required for the following transfers:
Between personnel and non-personnel accounts of less than $10,000; Between departments within the same fund under $50,000; Between accounts within the same fund and department between $25,000 and $50,000.
In case of an emergency or other circumstances where the delay would have a material negative impact on the City, the City Manager can approve transfers in excess of $50,000 provided that transfers are reported to Council at the next scheduled meeting.
Finance Director approval is required for the following transfers:
Expenditure Controls
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 291 Between accounts within the same fund and department under $25,000 Transfers of Capital Improvement Budgets
Projects are approved over a ten-year period by Council as part of the City’s ten-year Capital Improvement Program.
Any revisions increasing the total amount appropriated by fund require City Council approval. City Council approval is also required for transfers of capital improvements over $100,000. For transfers under $100,000, City Manager approval is required for transfers between capital projects in the same year and same fund, and transfers for the same project scheduled in different years.
Prepaid Expenses
The City Manager is authorized to approve prepaid expenditures when the payment relates to an ongoing service provided to the City and when failing to make payment would either cause an interruption to ongoing City operations or cause the City to operate illegally (e.g. failing to renew an insurance policy or software license). However, the payment classified as a prepaid expense shall not include more than a 10% increase over the prior year’s payment for the same product and a list is to be provided to Council for all prepaid expenditures that occurred under this authority.
Purchasing Process
The Finance Director will establish appropriate purchasing processes with adequate controls to ensure expenditures are properly approved and do not exceed City Council appropriations.
Expenditure Controls
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 292 General Fund Reserves
Purpose:
The purpose of this policy is to establish guidelines for the General Fund’s unrestricted fund balance to improve and maintain the City’s financial stability in order to protect the City from unforeseen or unbudgeted situations (e.g. natural disasters, major infrastructure failures, unexpected litigation).
Background:
Fund balance serves as a measure of the financial resources available in a governmental fund. It is essential that governments maintain adequate levels of fund balance to mitigate current and future risks (e.g. revenue shortfalls and unanticipated expenditures) and to ensure stable tax rates.
In February 2009, the Governmental Accounting Standards Board issued GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, which separates fund balance into five separate categories based on the type and source of constraints placed on how resources can be spent. Presented in descending order from most constraining to least constraining, they include: nonspendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and unassigned fund balance. The total amounts in the last three categories (where the only constraint on spending, if any, is imposed by the government itself) is termed unrestricted fund balance. GASB Statement No. 54 recommends “…at a minimum, that general-purpose governments, regardless of size, maintain unrestricted fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. The choice of revenues or expenditures as a basis of comparison may be dictated by what is more predictable in a government’s particular circumstances.” The adequacy of unrestricted fund balance in the General Fund should take into account the City’s unique circumstances and the City should consider the following factors to assess the adequacy of unrestricted fund balance:
Predictability of its revenues and volatility of its expenditures; Perceived exposure to significant one-time outlays;
Potential drain upon General Fund resources from other funds, as well as the availability of resources in other funds;
Potential impact on the entity’s bond ratings and the corresponding increased cost of borrowed funds; Commitments and assignments included in the unrestricted fund balance Policy:
The City of Avalon will strive to maintain an unrestricted fund balance equal to no less than six (6) months of regular General Fund operating expenditure budget. The regular operating expenditure budget includes all current operating expenditure appropriations, excluding capital outlays and other one-time discretionary payments.
Visitor-driven tax revenues (e.g. transient occupancy tax, sales tax, admission tax) account for the majority of the City’s General Fund revenues, with the predictability of these revenues dependent on overall tourism demand. Due to its unique location, City revenues are particularly vulnerable to disruptions to leisure travel and tourism caused by pandemics or other natural disasters. In addition, the City is responsible for managing multiple enterprise funds, with operating expenditures comparable in size to its General Fund, and the City needs to maintain reserves in order to cover immediate capital needs, if working capital is not sufficient in those funds.
Funds appropriated from unrestricted fund balance should be appropriated for non-recurring expenditures, as they represent prior year surpluses that may or may not materialize in subsequent years. However, draws from unrestricted fund balance below the six month target amount or to cover recurring operating costs are generally reserved for General Fund Reserves
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 293 emergency or unforeseen situations but may be accessed by Council by simple budget appropriation. Examples of situations may include but not limited to the following:
A. Sudden and unexpected significant facility failure that presents an immediate public safety concern to the community;
B. Declaration of a State of Emergency by the Governor; C. Unanticipated expenditures as a result of legislative changes from State/Federal governments in the current fiscal year;
D. Acts of Terrorism declared by the Governor or the President of the United States; E. Acts of nature, which are infrequent in occurrence; or F. Other emergency as defined by City Council
If unrestricted fund balance is to be used to fund recurring operating expenditures or if unrestricted fund balance falls below the minimum threshold, the Finance Director shall recommend and submit to City Council a plan to replenish reserves to minimum levels. This plan will specify the source of funding and timeframe for replenishment. Reserves should be replenished within three years, if possible.
General Fund Reserves
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 294 Enterprise Fund Working Capital Targets
Purpose:
The purpose of this policy is to establish guidelines for the enterprise funds’ working capital target to improve and maintain the City’s financial stability in order to protect the City from unforeseen or unbudgeted situations (e.g. natural disasters, major infrastructure failures, unexpected litigation).
Background:
Generally Accepted Accounting Principles (GAAP) does not permit the reporting of fund balance for enterprise funds.
However, enterprise funds distinguish between current and non-current assets and liabilities, allowing for the calculation of working capital (i.e. current assets less current liabilities). Working capital indicates the relatively liquid portion of total enterprise fund capital, which constitutes a margin or buffer for meeting obligations. For all further references to reserves for enterprise funds, net working capital is the intended meaning.
It is essential that a government maintain adequate levels of reserves or working capital in enterprise funds to mitigate current and future risks (e.g., revenue shortfalls and unanticipated expenses) and to ensure stable services and fees. Strength of collection practices, historical consumption of inventories, support from the general government, transfers out, cash cycles, customer concentration, demand for services, control over rates and revenues, asset age and condition, volatility of expenses, control over expenses, management plans for working capital and debt position should all be considered in determining adequate working capital or reserve targets for each fund.
Policy:
The City’s Enterprise Funds include the Harbor Fund, Sewer Fund, Saltwater Fund, Solid Waste Fund, and Avalon Transit Fund. Reserve levels for each fund are as follows:
Harbor Fund - The City of Avalon will strive to maintain a working capital balance equal to no less than four (4) months of regular Harbor Fund operating expenditure budget to cover harbor operations (Fund 103) and a minimum reserve of five hundred thousand dollars ($500,000) to provide funding to cover emergency capital costs in the harbor (Fund 104). The reserve amount exceeds the GFOA’s 45-day minimum working capital recommendation due to the Harbor’s limited ability to reduce variable costs in response to lower revenues (i.e. public safety costs relatively fixed), customer concentration (i.e. majority of revenues paid by cross channel and cruise ship carriers), and condition of infrastructure.
Sewer Fund – The City of Avalon will strive to maintain a target reserve balance equal to no less than three (3) months of operating and maintenance expenses, as outlined in the cost of service study. The reserve amount exceeds the GFOA’s 45-day minimum working capital recommendation due to the cash cycle, with remittances concentrated in the second half of the fiscal year, and condition of infrastructure.
Saltwater Fund – The City of Avalon will strive to maintain a target reserve balance equal to no less than three (3) months of operating and maintenance expenses, as outlined in the cost of service study. The reserve amount exceeds the GFOA’s 45-day minimum working capital recommendation due to the cash cycle, with remittances concentrated in the second half of the fiscal year, and condition of infrastructure.
Solid Waste Fund – The City of Avalon will strive to maintain a target reserve balance equal to no less than three (3) months of operating and maintenance expenses, as outlined in the cost of service study. The reserve amount exceeds the GFOA’s 45-day minimum working capital recommendation due to the cash cycle, with remittances concentrated in the second half of the fiscal year, and condition of infrastructure.
Avalon Transit Fund – The Avalon Transit Fund is subsidized by the General Fund, as transit revenues are not sufficient to cover operations. No working capital target has been set for this fund as the financial buffer or cushion is provided by the General Fund.
Enterprise Fund Working Capital Targets
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 295 Investment Policy
Policy:
It is the policy of the City of Avalon and the Successor Agency to the ACIA (hereinafter collectively referred to as "City" or the City of Avalon") to invest public funds in a prudent manner which will provide in the following order; 1) the highest level of safety of funds, along with 2) liquidity of funds in order that daily cash flow demands are met and, finally, that 3) yield or investment return be maximized while conforming to all laws of the State of California regarding the investment of public funds.
In accordance with Section 53646 ofthe government Code, the Finance Director and City Treasurer will annually render to the City Council a Statement of Investment Policy. The Finance Director, City Treasurer, and City Manager shall review the policy on an annual basis for submission and approval by the City Council.
Scope:
The City/Agency Treasurer (hereinafter referred to as "Treasurer") is authorized to invest the City's funds in accordance with the California Government Code Sections 53601.1,53602, and 53635. This investment policy applies to all financial assets of the City of Avalon. These funds are accounted for in the City’s Comprehensive Annual Financial Report, which includes the following fund types:
GeneralFund
Special revenue
Debt Service
Capital Projects
Enterprise
InternalService
Trust and Agency
Any new fund created by the legislative body, unless specifically exempted All monies entrusted to the Treasurer will be pooled in an actively managed portfolio except for the employee's retirement funds, which are administered separately and the proceeds of certain debt issues, which are managed and invested by trustees appointed under indenture agreements.
Prudence:
The actions of the Treasurer in the performance of his or her duties as manager of public funds shall be evaluated using the following prudent person standard applied in the context of managing the overall portfolio:
Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.
Investment officers acting in accordance with written procedures and the investment policy exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
Objective:
Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 296 The primary objectives, in priority order, of the City's investment activities shall be:
1. Safety — Safety of principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The City shall seek to safeguard principal by a careful examination of credit risk and market risk of individual investments.
a. Credit Risk — The chance that an issuer will be unable to make scheduled payments of interest and principal on an outstanding obligation. Another concern for investors is that the market's perceptions of a corporation's credit will cause the market value of a security to fall, even if default is not expected.
i. Market Risk — The chance that the value of a security will decline as interest rates rise. In general, as interest rates fall, prices of fixed income securities rise. Similarly, as interest rates rise, prices fall.
Market risk is also referred to as systematic risk or risk that affects all securities within an asset class similarly.
2. Liquidity - The City investment portfolio will remain sufficiently liquid to enable the City to meet all operating expenditure requirements, which might be reasonably anticipated. In order to maintain liquidity, no more than 50 percent of the portfolio will have a maturity in excess of one (1) year.
3. Return on Investment — The City investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the City investment risk constraints and the cash flow characteristics of the portfolio. Whenever possible, consistent with risk limitations and prudent investment principles, the City shall make an effort to achieve returns at the market average rate of return. The market average rate of return is defined as the average return on six-month US Treasury Bills.
Delegation of Authority:
The Treasurer has been authorized to undertake investment transactions on behalf of the City. This authority shall not pass to the Deputy Treasurer unless specifically authorized in writing by the Treasurer. Although the Treasurer has been authorized to undertake investment transactions, management responsibility for the City's investment program has been delegated to the Finance Department. The only officials authorized to undertake investment transactions on behalf of the City are the Treasurer, Finance Director, and City Manager. The actual disbursement of funds for the placement of individual investments undertaken by these three officials shall be subject to second party approval by officers authorized to sign City checks and wire transfers: the Mayor, City Manager, Chief Administrative Officer,and certain Department Heads.
The Treasurer is responsible for ensuring compliance with the City's investment policies and for ensuring that strong internal controls are in place through the oversight of the Finance Director.
Ethics and Conflicts of Interest:
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. The Treasurer, Finance Director, and all investment employees are required to file annual disclosure statements as required by the Fair Political Practices Commission (FPPC), thus shall disclose to the City Clerk any material financial interests in financial institutions that conduct business within the jurisdiction, and they shall further disclose any large personal financial investment positions that could be related to the performance of the City investment portfolio.
During the course of the year, if there is an event subject to disclosure that could impair the ability of the Treasurer, Finance Director, or any investment employee to make impartial decisions, the City Manager shall be notified in writing within 10 days. All City Council members, Mayor, City Treasurer, Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 297 Finance Director, and any investment employees are limited to the receipt of honoraria, gifts, and gratuities from advisors, brokers, dealers, bankers, or other persons with whom the City Treasury conducts business. The permitted approved maximum value of these items is $50.00.
Authorized Financial Dealers and Institutions:
The City shall transact business only with issuers, banks, savings and loans, and registered investment securities dealers. The purchase of any investment, other than those purchased directly from the issuer, shall be purchased either from an institution licensed by the State of California as a broker/dealer, as defined in Section 25004 of the Corporations Code, who is a member of the National Association of Securities Dealers (NASD), or a member of a Federally regulated securities exchange, a National or State-Chartered Bank, a Federal or State Association (as defined by Section 5102 of the Financial Code), or a brokerage firm designated as a Primary Government Dealer by the Federal Reserve Bank. The Treasurer's staff shall investigate all institutions that wish to do business with the City/Agency in order to determine if they are
adequately capitalized, make markets in securities appropriate to the City/Agency's needs and agree to abide by the conditions set forth in the City of Avalon/Successor Agency to ACIA Investment Policy and provide a current audited financial statement. The Treasurer will maintain a list of financial institutions authorized to provide investment services to the City.
Authorized and Suitable Investments
The State of California Government Code Sections 16429.1, 53601, et seq. limits the investment vehicles available to local agencies. The City of Avalon's Investment Policy further restricts the permitted investments to those listed below.
State Treasurer's Local Agency Investment Fund (LAIF) — Government Code Section 16429.1 authorizes each local government agency to invest with no maximum limit as of January 1, 2019, in this investment program administered by the California State Treasurer. Money invested with LAIF is pooled with State money in order to earn the maximum rate of return possible in a manner consistent with sound investment practices. Furthermore, LAIF provides daily liquidity. Therefore, there is no final-stated maturity for this investment category. Investments in LAIF shall not exceed $60 million total ($30 million each for the City and the Successor Agency to ACIA).
Los Angeles County Investment Pool (LACIP) — Government Code Section 27133: Money invested with the Los Angeles County Investment Pool is pooled with County money in order to earn the maximum rate of return possible in a manner consiste nt with sound investment practices.
United States Treasury Bills, Notes, and Bonds or those for which the full faith and credit of the United States are pledged for payment of principal and interest. In accordance with Government Code Section 53601, purchase of this category shall not exceed five years to maturity. There is no percentage limit in this category.
Federal Government Obligations — Government Code Section 53601: The City may invest in Federally sponsored agency securities including obligations issued by the Government National Mortgage Association (GNMA), the Federal Farm Credit Bank System (FFCB), the Federal Home Loan Bank Board (FHLB), the Federal Home Loan Mortgage Corporation (FHLMC), the Student Loan Mortgage Administration (SLMA), and the Federal National Mortgage Association(FNMA)). The “prudent investor” rule shall apply for a single agency name, as U.S. Government backing is implied rather than guaranteed. There is no percentage limitation of the funds that can be invested in this category. Although a five-year maturity limitation is applicable.
Negotiable Certificates of Deposit (CDs) — As authorized in Government Code Section 53601(i), no more than 30 percent of the agency’s money may be invested in negotiable certificates of deposit issued by a national or state-chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a stateInvestment Policy Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 298 licensed branch of a foreign bank. All purchases must be fully insured by the FDIC or fully collateralized.
A five-year maturity limitation is applicable.
Municipal Bonds issued by the State of California and other States in accordancewith Code Section 53601, to the extent that the principal amount invested in all funds of this type does not exceed Five Hundred Thousand Dollars ($500,000). A fiveyear maturity limitation is applicable.
Money Market Mutual Funds (with $1 net asset value) — Investments in money market mutual funds, according to 53601(l) and 53601.6(b) shall, 1) be restricted to those funds that have attained the highest ranking or highest letter and numerical rating provided by not less than two National Recognized Statistical Rating Organizations (NRSROs), 2) retain an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years of experience managing their specific category of fund and have assets under management in excess of $500,000,000. A further restriction is that the purchase price of shares of the mutual funds shall not exceed twenty percent (20%) of the local agency's surplus funds.
Collateralization
Collateralization will be required on all Demand Accounts and Uninsured Time Deposits. Demand Accounts and Uninsured Time Deposits with banks and savings and loans shall be collateralized in the manner prescribed by law for depositories accepting municipal investment funds.
Confirmation
Receipts for confirmation of purchase of authorized securities should include the following information: trade date, par value, rate, price, yield, settlement date, description of securities purchased, agency's name, net amount due, and third party custodial information. These are minimum information requirements.
Safekeeping of Securities
In accordance with Government Code Section 53601, all securities owned by the City shall be held in safekeeping by the City's custodial bank or a third party bank trust department, acting for the City under the terms of a custody agreement. All securities will be received and delivered using standard Delivery-Versus Payment procedures, which ensures that securities are deposited with the third party custodian prior to release of funds. A third party custodian, as evidenced by safekeeping receipts, will hold securities.
Investments in LAIF or money market mutual funds are undeliverable and are not subject to delivery or third party safekeeping.
Diversification
The City will diversify its investments by security type and institution. Except for US Treasury securities and authorized pools (LAIF and LACIP), no more than 50% of the entity's total investment portfolio will be invested in a single security type or with a single financial institution.
Maximum Maturities
To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities matured more than five (5) years from the date of purchase.
Internal Control
The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide assurances of internal controls through compliance with policies and procedures.
Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 299 Performance Standards
The investment portfolio will be designed to obtain the highest rate, with the greatest security and liquidity, consistent with the cash flow requirements of the City, but at no less rate on the date of investment than the rate being paid by the Local Agency InvestmentFund (LAIF).
Reporting
Under the provision of Section 53646 of the California Government code, the Treasurer shall render a report to the City Council and the City Manager containing detailed information on all securities, investments, and moneys of the City. The report will be submitted on at least a quarterly basis and provided to the City Council within 30 days following the end of the quarter or reporting period.
Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 300 The report will contain the following information on the portfolio that is subject to this investment policy:
1. The type of investment, name of the issuer, date of maturity, return on investments, activity, par and cost of each investment;
2. The weighted average maturity of the investments;
3. Description of any investments, including loans and security lending programs that are under the management of contracted parties;
4. The market value and source of the valuation;
5. A description of the compliance with the statement of investment policy; and a statement denoting the City's ability to meet its anticipated expenditure requirements for the next six (6) months.
Investment Policy and Adoption
The above investment policy is adopted by resolution of the City of Avalon and the Successor Agency to the Avalon Community Improvement Agency. According to Section 53646, the Treasurer shall review the policy on an annual basis and the City Council and the Successor Agency to the Avalon Community Improvement Agency members shall consider at a public meeting and approve any modifications made thereto.
Glossary:
Bankers' Acceptance - A draft bill or exchange accepted by a bank or trust company. The accepting institution, as well as the issuer, guarantees payment of the bill.
Bonds - A debt obligation of a firm or public entity. A bond represents the agreement to repay the debt in principle and, typically, in interest on the principal.
Broker - A person or firm that acts as an intermediary by purchasing and selling securities for others rather than for his or its own account.
Cash Flow — A comparison of cash receipts (revenues) to required payments(debt service, operating expenses, etc.).
Certificate of Deposit — A short-term, secured deposit in a financial institution that usually returns principal and interest to the lender at the end of the loan period. Certificates of Deposit (CDs) differ in terms of collateralization and marketability. Those appropriate to public agency investing include Negotiable Certificates of Deposit and Non-Negotiable Certificates of Deposit.
Collateralization - Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security.
Coupon — The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value; a certificate attached to a bond evidencing interest due on a payment date.
Dealer — Someone who acts as a principal in all transactions, including underwriting, buying, and selling securities, including from his/her own account.
Discount — The difference between the par value of a security and the cost of the security, when the cost is below par. Investors purchase securities at a discount when the return to the investor (yield) is higher than the stated coupon (interest rate) on the investment.
Diversification — Dividing investment funds among a variety of securities offering independent return.
Federal Credit Agencies — Agencies of the Federal Government set up to supply credit to various classes of institutions and individuals (e.g. savings and loans,small business firms, students, farmers, farm cooperatives, and exporters).
Federal deposit Insurance Corporation (FDIC) — A Federal agency that insures bank deposits, currently up to $250,000 per institution.
Fiduciary — An individual who holds something in trust for another and bears liability for its safekeeping.
Liquidity — The measure of the ability to convert an instrument to cash on a given date at full face or par value.
Local Agency Investment Fund — A voluntary investment fund open to government entities and certain non-profit organizations in California that is manage by the State Treasurer's Office.
Local Government Investment Pool — Investment pools that range from the State Treasurer's Office Local Agency Investment Fund (LAIF) to county pools, to Joint PowersAuthorities (JPAs). These funds are not subject Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 301 to the same SEC rules applicable to money market mutual funds.
Market Value — The price at which a security is trading and presumably could be purchased or sold at a particular point in time.
Maturity — The date on which the principal or stated value of an investment becomes due and payable.
Money Market Mutual Funds - Mutual funds that invest exclusively in short-term money market instruments. MMF's seek the preservation of capital as a primary goal while maintaining a high degree of liquidity and providing income representative of the market for short-term investments.
Municipal Notes, Bonds, and Other Obligations — Obligations issued by state and local governments to finance capital and operating expenses.
Mutual Funds — An investment company that pools money and can invest in a variety of securities, including fixedincome securities and money market instruments.
Portfolio — Combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent, or other asset. The purpose of a portfolio is to reduce risk by diversification.
Prudent Person Standard — A standard of conduct where a person acts with care, skill, prudence, and diligence when investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing funds. The test of whether the standard is being met is if a prudent person acting in such a situation would engage in similar conduct to ensure that investments safeguard principal and maintain liquidity.
Rate of Return — For fixed-rate securities, it is the coupon or contractual dividend rate divided by the purchase price, which is also the current yield.
Safekeeping — A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection.
Securities and Exchange Commission (SEC) — The Federal Agency responsible for supervising and regulating the securities industry.
US Treasury Obligations - Debt obligations of the US Government sold by the Treasury Department in the form of bills, notes, and bonds. Bills are short-term obligations that mature in one year or less and are sold at a discount.
Notes are obligations that mature between one year and ten years. Bonds are long-term obligations that generally mature in ten years or more.
Weighted Average Maturity (WAM) — The average maturity of all the securities that comprise a portfolio, typically expressed in days or years.
Yield — The current rate of return on an investment security is generally expressed as a percentage of the securities' current price.
Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 302 Investment Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 303 Investment Policy for Solid Waste
Postclosure and Corrective Action Trust
Fund
Policy
It is the policy of the City of Avalon (“City”) to invest public funds pertaining to the City’s Landfill and Solid Waste Collection System in a manner that will provide maximum security for the City’s capital, while also meeting the cash flow needs of the City relative to its participation in CalRecycle’s Solid Waste Postclosure and Corrective Action Trust Fund (“State Trust Fund”). This policy conforms to all state and local law governing the investment of public funds and aims to maximize return within an acceptable and defined level of risk.
Scope
This investment policy applies to the City’s establishment of a trust fund for landfill closure and postclosure costs (“Local Trust Fund”) in compliance with CalRecycle’s State Trust Fund program, as well as to cover corrective action and operating liabilities. This policy is intended to supplement and not replace any other City investment policies for general operations or other specified purposes.
Fiscal Prudence (Government Code § 53600.3)
Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, direction and intelligence exercise in the management their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.
The standard of prudence to be used by City officials responsible for the investment of public funds shall be the “prudent investor” standard and shall be applied in the context of managing the portfolio of the Local Trust Fund.
Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual’s security risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
Investment Objectives
Safety – The safety or risk associated with an investment refers to the potential loss of principal, accrued interest, or a combination of these. The City seeks to mitigate credit risk by prequalifying and continuously monitoring financial institutions with which it will do business and by careful scrutiny of the credit worthiness of the investment instruments as well as the institutions. Such resources as FDIC bank ratings, Sheshunoff, Fitch, Moody’s, and Standard and Poor’s rating services may be utilized for this review. The City seeks to mitigate interest rate risk through diversification of instruments as well as maturities.
Liquidity – The City’s investment portfolio will be structured with sufficient liquidity to allow the City to meet its anticipated cash requirements. This will be accomplished through diversity of instruments to include those with active secondary markets, those which match maturities to expected cash needs, and the State Local Agency Investment Fund (LAIF) with immediate withdrawal provisions.
Yield – A competitive market rate of return is the third objective of the City’s investment program after the fundamental requirements of safety and liquidity have been met.
Delegation of Authority
Investment Policy for Solid Waste Postclosure and Corrective Action Trust Fund Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 304 The City Treasurer has been authorized to undertake investment transactions on behalf of the City. This authority shall not pass to the Deputy Treasurer unless specifically authorized in writing by the Treasurer. Although the Treasurer has been authorized to undertake investment transactions, management responsibility for the City's investment program has been delegated to the Finance Department. The only officials authorized to undertake investment transactions on behalf of the City are the Treasurer, Finance Director, and City Manager. The actual disbursement of funds for the placement of individual investments undertaken by these three officials shall be subject to second party approval by officers authorized to sign City checks and wire transfers: the Mayor, City Manager, and certain Department Heads.
The Treasurer is responsible for ensuring compliance with the City's investment policies and for ensuring that strong internal controls are in place through the oversight of the Finance Director.
Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. The Treasurer, Finance Director, and all investment employees are required to file annual disclosure statements as required by the Fair Political Practices Commission (FPPC), thus shall disclose to the City Clerk any material financial interests in financial institutions that conduct business within the jurisdiction, and they shall further disclose any large personal financial investment positions that could be related to the performance of the City investment portfolio.
During the course of the year, if there is an event subject to disclosure that could impair the ability of the Treasurer, Finance Director, or any investment employee to make impartial decisions, the City Manager shall be notified in writing within 10 days. All City Council members, Mayor, City Treasurer, Finance Director, and any investment employees are limited on the receipt of honoraria, gifts, and gratuities from advisors, brokers, dealers, bankers, or other persons with whom the City Treasury conducts business. The permitted approved maximum value of these items is $50.00.
Authorized Financial Dealers and Institutions (Government Code § 53601.5) The City shall transact business only with issuers, banks, savings and loans, and registered investment securities dealers. The purchase of any investment, other than those purchased directly from the issuer, shall be purchased either from an institution licensed by the State of California as a broker/dealer, as defined in Section 25004 of the Corporations Code, who is a member of the National Association of Securities Dealers (NASD), or a member of a Federally regulated securities exchange, a National or State-Chartered Bank, a Federal or State Association (as defined by Section 5102 of the Financial Code), or a brokerage firm designated as a Primary Government Dealer by the Federal Reserve Bank. The Treasurer's staff shall investigate all institutions that wish to do business with the City, in order to determine if they are adequately capitalized, make markets in securities appropriate to the City’s needs, and agree to abide by the conditions set forth in this policy and provide a current audited financial statement. The Treasurer will maintain a list of financial institutions authorized to provide investment services to the City.
Authorized and Suitable Investments
In accordance with Government Code sections 16429.1 and 53601 et seq., the City hereby restricts permitted investments to the following:
Investment Type Maximum
Maturity
Maximum
Percentage
of Portfolio
Maximum
par value
per name
Credit/Minimum Quality
Requirements
US Treasury Bills, Bonds,
and Notes
5 years — See
Maximum
Maturity
requirements
0-70% None Full faith and credit of the
United States Government
Investment Policy for Solid Waste Postclosure and Corrective Action Trust Fund Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 305 Federal Agency Securities 5 years — See
Maximum
Maturity
requirements
0-70% $15,000,000 Implied guarantee of the US
Government. Federal Agency
Securities have an Aaa/AA+
Moody's/ S&P rating.
Local Agency Bonds 5 years — See
Maximum
Maturity
requirements
0-20% $5,000,000 Shall be rated in a rating category
of "A" or its equivalent or better
by a nationally recognized rating
service such as S&P or Moodys.
State of California
Obligations
5 years — Sec
Maximum
Maturity
requirements
0-20% $5,000,000 Shall be rated in a rating category
of "A" or its equivalent or better
by a nationally recognized rating
service such as S&P or Moodys.
CA Local Agency
Obligations
5 years — See
Maximum
Maturity
requirements
0-20% $5,000,000 Shall be rated in a rating category
of "A" or its equivalent or better
by a nationally recognized rating
service such as S&P or Moodys.
Money Market Funds N/A 0-20% 10% per
single
issue
Multiple requirements including
highest
ranking by two nationally
recognized
rating agencies, must have fund
advisor
registered with the SEC, have
more than
$500 million under management,
etc.
Certificates of Deposit
— Private Placement
Certificate of Deposit
Account Registry
Service (CDARS) &
Negotiable Certificates
of Deposit
5 years 0-30% $250,000
per issuer
Federal Deposit Insurance
Corporation
(FDIC) Insured limited to
$250,000 per
issuer.
Repurchase Agreements 30 days 0- 10% $2,000,000 Signed Security Loan Agreement in file. Reverse
Repurchase Agreements are
specifically not authorized
under this investment policy.
Local Agency Investment
Fund (LAIF)
N/A 0-60% $20,000,000
(per entity)
Investment of funds in the
California LAIF which allows the
State Treasurer to invest through
the Pooled Money Investment
Account
Los Angeles County
Investment Pool (LACIP)
N/A None None Investment of funds in the local
LACIP which allows the County
Treasurer to invest through a
pooled account
Medium-term Corporate
Bonds
5 years 0-20% $2,000,000 Shall be rated in a rating category of "A" or its equivalent or better
by a nationally recognized rating
service such as S&P or Moodys.
Collateralization
Investment Policy for Solid Waste Postclosure and Corrective Action Trust Fund Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 306 Collateralization will be required on all Demand Accounts and Uninsured Time Deposits. Demand Accounts and Uninsured Time Deposits with banks and savings and loans shall be collateralized in the manner prescribed by law for depositories accepting municipal investment funds.
Confirmation
Receipts for confirmation of purchase of authorized securities should include the following information: trade date, par value, rate, price, yield, settlement date, description of securities purchased, agency's name, net amount due, and third party custodial information. These are minimum information requirements.
Safekeeping of Securities
In accordance with Government Code Section 53601, all securities owned by the City shall be held in safekeeping by the City's custodial bank or a third party bank trust department, acting for the City under the terms of a custody agreement. All securities will be received and delivered using standard Delivery Versus Payment procedures, which ensures that securities are deposited with the third party custodian prior to release of funds. A third party custodian, as evidenced by safekeeping receipts, will hold securities. Investments in LAIF or money market mutual funds are undeliverable and are not subject to delivery or third party safekeeping.
Diversification
The City will diversify its investments by security type and institution. Except for US Treasury securities and authorized pools (LAIF and LACIP), no more than 50% of the entity's total investment portfolio will be invested in a single security type or with a single financial institution.
Maximum Maturities
To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow and authorized by the Government Code, the City will not directly invest in securities matured more than five (5) years from the date of purchase.
Internal Control
The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide assurances on internal controls through compliance with policies and procedures.
Performance Standards
The investment portfolio will be designed to obtain the highest rate, with the greatest security and liquidity, consistent with the cash flow requirements of the City, but at no less rate on the date of investment than the rate being paid by the Local Agency Investment Fund (LAIF).
Reporting
Pursuant to the Government Code, the Treasurer shall render a report to the City Council and the City Manager containing detailed information on all securities, investments, and moneys of the City, including investments made for the limited purpose of the Local Trust Fund. The report will be submitted on at least a quarterly basis and provided to the City Council within 30 days following the end of the quarter or reporting period. The report will contain the following information on the Portfolio that is subject to this investment policy:
1. The type of investment, name of the issuer, date of maturity, par and cost in each investment;
2. The weighted average maturity of the investments;
3. Description of any investments, including loans and security lending programs that are under the management of contracted parties;
Investment Policy for Solid Waste Postclosure and Corrective Action Trust Fund Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 307
4. The market value and source of the valuation;
5. A description of the compliance with the statement of investment policy; and
6. A statement denoting the City's ability to meet its anticipated expenditure requirements for the next six (6) months.
Adoption
This investment policy is adopted by resolution of the City of Avalon. The Treasurer shall review the policy on an annual basis and the City Council shall consider at a public meeting and approve any modifications made thereto.
Investment Policy for Solid Waste Postclosure and Corrective Action Trust Fund Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 308 Investment Policy for Solid Waste Postclosure and Corrective Action Trust Fund Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 309 Credit Card Purchasing Policy
Purpose:
The purpose of the policy is to establish a framework for the appropriate use of City-issued credit cards. The use of Cityissued credit cards is intended to streamline small dollar purchases, reduce the acquisition period, reduce requests for employee reimbursements, and minimize the use of personal credit cards for City-related expenses. Employees with City-issued credit cards (Card Users) must also adhere to the City’s Procurement Policy, as outlined in the Avalon Municipal Code, as well as the City’s Travel and Expense Reimbursement Policy.
Background:
The City utilizes credit cards for the procurement of goods for administrative convenience and efficiency. The City’s credit card is managed by the Finance Department. The Finance Director, or their designee, is responsible for the issuance, activation, cancellation, and payment of the credit card. Additionally, the Finance Department reviews the documentation of credit card usage for compliance with the Credit Card Purchasing Policy with final approval by the Finance Director.
Policy:
Purchases made by credit card must adhere to the City’s Procurement Policy, as outlined in the Avalon Municipal Code Title 3, Chapter 4, and with the City’s Travel and Expense Reimbursement Policy.
Credit cards may be issued to City of Avalon department heads and their designees, as approved by the City Manager.
Credit cards shall not be issued to City Council Members, members of boards, committees, or commissions, volunteers, part-time employees, seasonal employees, or contracted employees. Prior to card issuance, employees will also be required to sign the cardholder agreement (Attachment A), indicating that they understand and accept the terms of the policy.
City credit cards may not be used for the following:
1. Cash advances
a. Personal transactions unrelated to official City business b. Transactions beyond established credit limits
c. Purchases that circumvent or violate City policies, finance policies, or exceed budgetary limits for the category of expense
d. Purchases unauthorized or unlawful under federal and state laws, including but not limited to, ethical rules related to gifts and reporting obligations of elected officials e. Purchases deemed unauthorized or out of compliance with other applicable provisions of City of Avalon policies
Within five business days of receiving the credit card statement, card users must submit to the Finance Department detailed receipts and descriptions of all credit card statement transactions, listing the business purpose, attendees, date of purchase merchant’s name and budgeted account codes. If the card user does not have the proper documentation for a transaction, an explanation shall be provided in the form of a memo countersigned by the card user’s supervisor that includes a description of the item, business purpose, attendees, date of purchase, merchant’s name budgeted account codes, and the reason why the documentation is missing.
Card Users shall take necessary measures to prevent unauthorized charges against the card. If the credit card is lost or stolen, the Card User shall immediately report the occurrence to the Finance Director so that the card may be cancelled. The Finance Department will coordinate with the Card User and the credit card issuer in handling all Credit Card Purchasing Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 310 disputed transactions. If the credit card is used for personal transactions, such use shall be immediately reported and the amount charged to the credit card shall be immediately refunded by the Card User.
The Finance Department will submit to the City Council a supplemental report attached to the bi-weekly warrant report that describes the individual credit card transactions for the month.
Violation of this Policy may result in penalties including but not limited to:
Loss of credit card privileges;
A demand for restitution to the City for unauthorized or improper purchases; Prosecution under state or federal law for misuse of public resources; Disciplinary action up to and including termination.
The following is a list of the default monthly card and transaction limits for Card Users. Deviations from the proposed users and limits must be approved by the City Manager and documented in the cardholder agreement.
Position Card Limit Transaction Limit
City Manager $15,000 $5,000
Assistant City Manager $15,000 $3,000
Fire Chief $10,000 $3,000
Harbor Master $10,000 $3,000
Public Works Director $10,000 $3,000
Finance Director $5,000 $1,000
Community Services Manager $5,000 $1,000
Assistant Harbor Master $5,000 $1,000
Maintenance Superintendent $5,000 $1,000
Other as designated by City Manager $2,500 $1,000
ATTACHMENT A
CITY OF AVALON CARDHOLDER AGREEMENT
I, ___________________________, hereby acknowledge receipt of the following credit card: ________ (last four digits) I understand that improper use of this card may result in disciplinary action, as outlined in the City of Avalon Personnel Rules and Regulations, as well as personal liability for any improper purchases. As a cardholder, I agree to comply with the terms and conditions of this agreement, including the attached Credit Card Purchasing Policy.
I acknowledge receipt of the Credit Card Purchasing Policy and confirm that I have read and understand the terms and conditions. I understand that by using this card, I will be making financial commitments on behalf of the City of Avalon and that the City of Avalon will be liable to U. S. Bank for all charges made on this card.
I will strive to obtain the best value for the City of Avalon when purchasing with this card.
As a holder of this City of Avalon credit card, I agree to accept the responsibility and accountability for the protection and proper use of the card. I will return the card to the Finance Director, upon demand, during the period of my employment. I further agree to return the card upon termination of employment. I understand that the card is not to be used for personal purchases. If the card is used for personal purchases or for purchases for any other entity, the City of Avalon will be entitled to reimbursement from me for such purchases. The City of Avalon shall be entitled to pursue legal action, if required, to recover the cost of such purchases, together with costs of collection and reasonable attorney fees.
Credit Card Purchasing Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 311 Card Limit: ________________ Transaction Limit: ______________ Signature ___________________________________________ Date ___________________ (Cardholder)
APPROVAL:
Signature ___________________________________________ Date ___________________ (Finance Director)
Signature ___________________________________________ Date ___________________ (City Manager)
Credit Card Purchasing Policy
Fiscal Year 2026-2027 Proposed Operating and Capital Budget | Avalon Page 312
CITY OF AVALON CITY COUNCIL
MEETING DATE: June 16, 2026 CLOSED SESSION ITEM: _______ ORIGINATING DEP: City Attorney CITY MANAGER: iA/J.PREPARED BY: - SUBJECT: Closed Session Exhibits
Conference with legal counsel—anticipated litigation
Gov’t Code Section 54956.9(d)(2): 2 cases
The City has received two letters from Lance Ware, one dated May 29, 2026 and the other dated June 3, 2026 threatening litigation. Copies of the letters (without any exhibits) areattached and are also available for public inspection with exhibits pursuant to Government Code Section 54957.5.
LANCE WARE
P0 Box 172
Avalon, California 90704
[email protected] (949) 394-7099
May 29, 2026
VIA E-MAIL AND U.S. CERTIFIED MAIL, RETURN RECEIPT REQUESTED The Honorable Anni II. Marshall, MayorThe Honorable Lisa Lavelle, Mayor Pro Tern The Honorable Michael Ponce. Council Member
The Honorable Yesenia Dc La Rosa, Council Member
The Honorable Mary Schickling, Council demberCity of’ Avalon 410 Avalon Canyon RoadAvalon, California 90704
Re: Demand for Cure and Correct under California Government Code § 54960, 54960.1, and 54960.2 — Seven Closed Sessions of the Avalon City Council — January 20, 2026; February 3, 2026; May 19, 2026; March 27, 2024; May 16, 2023; September 17, 2024; and May 21, 2024 cc: David M. Maistros, City Manager; Gabrielle Morones, City Clerk; Scott H. Campbell, City Attorney IBest Best & Krieger LLP Honorable Members of the City Council of the City of Avalon:
I write under California Government Code § 54960, 54960.1, and 54960.2 to demand that the Council cure or correct seven actions of the City Council that I am informed and believe were taken in violation of the Ralph M. Brown Act, Government Code § 54950 et seq. What follows is, I hope, a document the Council and its constituents can read in one sitting. The substance is serious and the relief I seek is precise.
I. What This Demand Concerns
Three closed sessions of this Council in the first 119 days of 2026—on January 20, February 3, and May 19 — were each agendized under Government Code § 54956.9(d)(4) as “initiation of litigation” closed sessions. In those four months, the City has commenced no litigation: no civil complaint in any court, no administrative adjudication, no proceeding before any hearing officer or arbitrator, and no demand letter to me or to AVX Networks asserting a claim. The City’s own May 11, 2026 FinalProduction on my Public Records Act Request #2 identified the documents that triggered the. January 20, 2026 closed session as my own constitutionally protected First Amendment petitioning activity: my December 1 8, 2025 Reply Comments filed in Federal Communications Commission Docket No. WC 25-253 (Build America: Eliminating Barriers to Wireline Deployments), and my September 22, 2025 constituent email asking this Council to pursue inter-governmental cooperation with Los Angeles Countyon the federally- and state-funded broadband project this Council had endorsed unanimously by Resolution 22-47.
The only action that has flowed from any of the three “initiation of litigation” closed sessions is the May 22, 2026 cx parte communication filed by Best Best & Krieger LLP on behalf of the City of Avalon (as a stand-alone filing, not on behalf of any coalition), signed by City Attorney Scott H. Campbell under BBK internal matter number 65059,00300, in Federal Communications Commission WC Docket No. 25- 253 (Build America: Eliminating Barriers to Wireline Deployments) and WC Docket No. 25-276 (Build America: Eli,ninating Barriers to Wireless Deployments) — the very dockets in which AVX Networks filed Comments and Reply Comments naming the City of Avalon and in which AVX Networks is, on the federal record, the entity advocating for the Catalina last-mile broadband project. The City of Avalon was not at any time a named member of the “Local Community Coalition” through which Best Best & Krieger LLP filed earlier ex parte communications in WC Dockets 25-253 and 25-276; 1 am aware of no public Council vote, no staff report, and no agenda item authorizing the May 22, 2026 cx parte filing in the City’s name. That broadband project, on December 18, 2025, received a $37,571,833 federal grant award under CPUC Resolution T-17896 — the largest single grant award in the City of Avalon’s history.
The Council’s three contemporaneous closed sessions, and the May 22, 2026 cx parte filed in Avalon’s name adverse to AVX Networks and to the public-interest broadband objectives of the City’s own residents and of the people of Santa Catalina Island, are not consistent with the Council’s own unanimous public votes on Resolutions 22-47 (August 16, 2022), 24-16 (May 7, 2024, amended May 21, 2024), and 24-17 (June 4, 2024).
Four additional closed-session actions — on March 27, 2024 (the LBUSD settlement); May 16, 2023 and September 17, 2024 (the Maistros compensation amendments); and May 21, 2024 (the re-staged report-out of the concealed March 27, 2024 settlement decision) each were the subject of false nr incomplete “no reportable action” reports at the time and are brought under Government Code § 54960.2(a)( 1 )(B) active-concealment cure-and-correct. They are described in Section IV below.
II. Mayor Marshall’s Refusal to Engage My Accountability Questions, Then a Secret Vote Against Me 72 Hours Later
Mayor Anni Marshall texted me on May 13, 2026 stating she ‘ha/’dJ lots ofquestions” about the under sea cable. The parties met at the Mayor’s request on Friday, May 15, 2026, at 1:00 p.m. at the base of the Avalon Pier; the meeting ran approximately one hour, and the Mayor received my answei’s to her questions about the AVX Networks submarine fiber-optic project. On Saturday, May 16, 2026, I sent Mayor Marshall a follow-up text message posing two specific questions of my own — questions 1 asked the Mayor to answer: (1) why City-installed conduit had been provided to Catalina Broadband and AT&T during the Five Corners trench but not to AVX, even after AVX had marked up the City’s drawings: and (2) why the $100,000 the Council had committed by unanimous Resolutions 24-16 and 24-17 (May 2024) was being held back. Mayor Marshall did not respond to my May 16 text. Three days later, on Monday.
May 19, 2026, Mayor Marshall participated in, and voted unanimously to authorize, the City Attorney’s filing of ‘papers with the federal communications comiissioi” in a closed session held under Government Code § 54956.9(d)(4) (“initiation of litigation, one case”). The closed session ran approximately thirty-one (31) minutes (entry at approximately 8:34 p.m. PT and report-out at approximately 9:05 p.m. PT, per the City of Avalon’s own YouTube broadcast of the meeting). Counsel tiled the cx parte before the Federal Communications Commission three day’s later, on Thursday, May 22, 2026 —•adverse to AVX Networks and adverse to the public-interest broadband objectives of the ‘ery residents of the City of Avalon and the very people of Santa Catalina Island whose interests the Council had unanimously voted to support by Resolutions 22-47, 24-16, and 24-17.
The two specific accountability questions I posed to the Mayor on May 16, 2026 remained unansweredwhen the Council voted in closed session on May 19. They remained unanswered when Best Best & Krieger LLP filed the ex parte on May 22. They remain unanswered as of the date of this demand. The Mayor’s duty is to her constituents — not to her outside counsel’s national telecommunications-policy posture in federal-agency rulemaking proceedings. The asymmetry is the point: the Mayor received my answers to the questions she had asked of me about the AVX Project, then declined to engage my spccilicaccountability questions about the City’s obstruction of the same project, then voted in secret 72 hours later to authorize federal-agency papers in the City’s name adverse to AVX Networks and to the broadband interests of the residents she serves.
A presiding officer who is still asking the project sponsor basic factual questions 96 hours before her closed-session vote, and who has received no response to specific written follow-up questions as of three days before her vote, is not, on the record, exercising the § 54956.9(d)(4) statutory predicate of ‘decidingwhether to initiate” litigation against that same project sponsor “based on existing facts and circumstances.”
111. Five Defects in the May 19, 2026 Closed Session (Each Independently Sufficient) A. FCC rulemaking advocacy is not “litigation” under § 54956.9(c). Federal CommunicationsCommission WC Docket No. 25-253 (BuildAmerica: Eliminating Barriers to Wireline Deployments) and WC Docket No. 25-276 (Build America. Eliminating Barriers to Wireless Deployments) are rulemaking proceedings developing rules of general applicability, not adjudications of party rights. AVX Networks is a commenter of record in both dockets, having filed Comments and Reply Comments naming the City of Avalon. Filing an FCC cx parte communication in an FCC rulemaking whether on behalf of the City as a stand-alone filing or on behalf of any coalition — is regulatory advocacy, not “initiation of litigation.” That decision was an open-session matter under Government Code § 54954.2 and 54957.5; it was not lawfully a closed-session matter under § 54956,9(d)(4). The closed-session use was unauthorized under § 54953.
B. The Mayor’s refusal to engage my specific written accountability questions before the closedsession vote forecloses good-faith “deciding whether to initiate.” See Section II above. The Mayor’s silence on my May 16, 2026 accountability questions — about City conduit allocation and the $100,000 Resolution 24-16/24-17 local match — followed by her secret vote 72 hours later to authorize federalagency papers against me is materially inconsistent with the statutory premise of ‘decided to initiate or is deciding whether to initiate litigation . . . based on existing Jcts and circumstances. “§ 54956.9(d)(4). A presiding officer who refUses to answer the project sponsor’s specific written questions cannot be “deciding whether to initiate” litigation against that project sponsor based on existing facts andcircumstances; she is choosing to act without the facts.
C. Three § 54956.9(d)(4) closed sessions in 119 days. Zero litigation initiated. The Brown Act’s closed-session exemptions are construed strictly against the agency, and the agency bears the burden of establishing the statutory predicate. ,S’acramen/o Newspaper Guild v. Sacramento County Bd. ofSupervisors (1968) 263 Cal.App.2d 41; Roberts v. Cit3 ofPalmdaie (1993) 5 Cal.4th 363. The exemption must be tied to a specific identified matter, not vague references. Shapiro v. San Diego City Council (2002) 96 Cal.App.4th 904. A “no reportable action” report yihen a reportable decision was reached is itself a Brown Act breach. Page v. MiraCosta Community College Dist. (2009) 180 Cal.App.4th 471. NoCalifornia appellate court has yet addressed staleness under § 54956.9(d)(4) — the practical question of how many invocations of “deciding whether to initiate” the same exemption may support without an actual filing — but the established principles require the City to come forward with the specific facts andcircumstances that supported good-faith deliberation toward litigation initiation on each of the three dates.
If the Council cannot identify those facts in a public corrective report, the exemption was not satisfied.
D. The § 54957.1(a)(2) report-out category does not fit the action reported — the either-or trap. The City Attorney’s verbatim May 19 report-out — “council finj close session unanimously authorizes cTh’ attorney tojile []papers with the federal communications [] commission” — does not fit § 54957,l(a)(2) (which covers only “defend,” “appellate review or relief,” or “amicus curiae” in “litigation”); does not fit § 54957.1(a)(l) (settlement); does not fit § 54957.1(a)(3) (approval given in connection with “a claim orlitigation”); and does not fit § 54957.1(a)(4) (real-property), § 54957.l(a)(5) (public employee), or any other § 54957.1 reporting category. Either the action authorized was “litigation” —in which case the report-out is procedurally defective because it fits no statutory category — or the action was not “litigation” — in which case the § 54956.9(d)(4) closed-session exemption was unavailable in the firstplace. Both branches converge: the May 19, 2026 closed session and report-out were not lawfully authorized.
E. The § 54954.5(c) agenda is internally contradictory on all three 2026 (d)(4) agendas. The closed session caption on the May 19, 2026 agenda reads “CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION” (the language of the § 54956.9(d)(2) “exposure” exemption) above a citation to § 54956.9(d)(4) (the entirely separate “deciding whether to initiate” exemption). Subdivisions (d)(2) and (d)(4) are not interchangeable: (d)(2) governs the City as defendant; (d)(4) governs the City as plaintiff. The same heading/citation conflict appears verbatim on the January 20, 2026 and February 3, 2026 agendas. The January 20, 2026 minutes further cite the item as held “pursuant to §54956.9 (c)” -— subdivision (c) is the definition of “litigation,” not a closed-session exemption at all. The public including AVX Networks, the City’s residents, the project’s other stakeholders, and the people ofa community the California Public Utilities Commission has classified as 100% unserved— could notdetermine from the face of the published material which exemption was being invoked or what statutory predicate the Council was required to satisfy.
IV. The Other Four Challenged Actions
The January 20, 2026 closed session (“two cases”) and the February 3, 2026 closed session (“three cases” — one publicly reported as relating to catalina Restoration, two unreported). These are the first two of the three § 54956.9(d)(4) closed sessions described in Sections I, Ii, and III above. The defects identified in Section III apply with equal force to each. The 90-day § 54960.1 windows for these twosessions expired on April 20 and May 4, 2026 respectively; I bring them under § 54960 declaratory relief (no temporal bar) and under § 54960.2(a)(l)(B) active-concealment cure-and-correct. My discovery anchor for both is May 11, 2026— the date of the City’s Final Production Letter on Public Records Act Request #2, which for the first time identified the trigger of the January 20 closed session as my constitutionally protected First Amendment petitioning. The production letter’s footer bears Best Best & Krieger LLP internal matter number 65059.000 12 on every page — the matter number under which Best Best & Krieger LLP is ghost-drafting the City’s Public Records Act responses. a separate matter number from 65059.00300 under which Best Best & Krieger LLP signed the May 22, 2026 FCC ex parte adverse to AVX.
The March 27, 2024 special-meeting “no reportable action” report on the $2 million LBUSDsettlement. On March 27, 2024, the Council held a special meeting from approximately 8:30 am. with a single closed-session item captioned as “Conference with Legal Counsel —-Existing Litigation” referencing Long Beach Unfled School District v. Santa Catalina Island Co. and City ofAi’alon, Case No. 2:19-cv-01139 (C.D. Cal.). The Council reported “no reportable action.” On the next day in open federal court— March 28, 2024— Best Best & Krieger partner Joseph Van Eaton stated of record, “the Citj’ hassettled, and Joshua N. Levine of Booth LLP confirmed a “$2 million.., signed term sheet.
The “no reportable action” report was false. The Council in fact authorized the $2 million settlement on March 27. 2024 and concealed the action from the public. I bring this action under Government Code § 54960.2(a)(l)(B); my documentary-knowledge anchor is April 22, 2026, the date I received the certifiedfederal-court transcript of the March 28, 2024 hearing from Federal Official Reporter Amy Diaz, RPR, CRR, FCRR (350 W. 1st St., #4455, Los Angeles, CA 90012), after a five-step concealment chain acrosstwo years of escalating Public Records Act inquiries. The 9-month § 54960.2(a)(l)(B) clock runs from April 22, 2026.
The May 21, 2024 closed session and Campbell-delivered re-staged report-out. Fifty-five days afterthe concealed March 27, 2024 settlement decision, on May 21, 2024, the Council convened a § 54956.9(d)(l) “existing litigation” closed session for which the substantive Council decision had already been reached. Best Best & Krieger LLP and City Attorney Scott H. Campbell had been federally disqualified from representing the City of Avalon in the LBUSD Federal Action since the March 22, 2022order in that case. Campbell nonetheless joined the Council’s open public meeting virtually fbllowing the closed session — appearing in the City’s Zoom session only after City staff admitted him into the meeting arid delivered the report-out, framing the prior-and-concealed March 27, 2024 settlement decision as a contemporaneous “unanimous vote by the council” on May 21, 2024. The May 21, 2024 closed session was not a § 54956.9(b) “advise on, or strategize with respect to, pending litigation” closed session; the substantive Council decision had already been reached fifty-five days earlier and reduced to a signed term sheet. The May 21, 2024 closed session was a sham re-staging convened to cover the prior concealment. Ibring this action under Government Code § 54960.2(a)(l)(B); my discovery anchor is the same April 22,2026 federal-court transcript.
The May 16, 2023 and September 17, 2024 closed-session Maistros PEPE-to-amendment compensation directions. On each of May 16, 2023 and September 17, 2024, the Council convened a closed session captioned as a § 54957(b)(l) Public Employee Performance Evaluation for the City Manager and reported ‘no reportable action.” Each closed session in fact produced direction to staff toprepare a 5% merit-increase amendment to the City Manager’s employment agreement, with retroactive effective date predating the open-session vote authorizing the amendment by seven and one-half monthson each occasion. The City’s own subsequent open-session staff reports admit this verbatim: the June 20, 2023 staff report (Finance Director Matthew Baker, with the “CITY MANAGER” approval block signed by City Manager David M. Maistros) admits, “On May 16, 2023, the City Council completed the annual peformance evaluation .for the City Manager... City Council directed staffto prepare an amendment to the compensation section ofthe EmploymentAgreement to provide a 5% merit increase to the City Manager’s base salaiy, “and the October 1, 2024 staff report makes the parallel admission as to September 1 7, 2024. The respective First and Second Amendments recite “the Parties have been in discussions concerning this in 2023” and “in 2024. “Each “no reportable action” report was false.
Direction to staff to prepare a compensation amendment is reportable under Government Code § 54957.1(a). Galbiso v. Orosi Public Utility District (2008) 167 Cal.App.4th 1063; Page v. Mii-acosta Community Uo!lege Dist. (2009) 180 Cal.App.4th 471. 1 bring both actions under Government Code § 54960.2(a)(1)(B); my documentary-knowledge anchor is May 6, 2026 the date 1 completed correlating the Maistros employment-agreement packets in the City’s Laserfiche public-records system against the closed-session NRA report-outs for the first time. The 9-month § 54960.2(a)(1)(B) clock runs from May 6, 2026 as to each action.
V. Notice of Apparent Pattern
The § 54956.9 closed-session infirmities described above in the City ofAvalon’s January 20, February 3, and May 19, 2026 sessions appear not to be isolated. I observe that similar patterns of(d)(4) “initiation of litigation” agendization followed by “no reportable action” reporting without any actual litigation initiated — appear in other municipalities represented by the City’s current outside counsel. I reserve all rights to pursue further re1ief in additional forums, based on the broader practice. The cure-and-correct demand set forth in Section VI below extends not only to the specific closed-session actions identified above but also to any City-wide practice, policy, or counsel guidance that produced them.
VI. Cure or Correct — What I Ask the Council to Do
Pursuant to Government Code § 54960.l(c)(1) and 54960.2(b)(3), I request that the Council cure or coiTect each of the seven challenged actions within thirty (30) days of receipt of this demand by taking each of the following actions in a duly noticed open public meeting:
A. Rescind in open session the closed-session action authorizing the May 22, 2026 BBK cx parte filing. Adopt a written resolution rescinding any May 19, 2026 closed-session direction or authorization concerning Best Best & Krieger LLP’s May 22, 2026 ex parte filing in FCC WC Docket No. 25-253 or any other filing or position in any FCC docket. Direct that Best Best & Krieger LLP correspondingly withdraw the May 22, 2026 ex parte filing.
B. Re-deliberate in open session, if the CoLincil wishes to take any position in any FCC docket. Anyfurther Council deliberation on whether to participate in FCC WC Docket No. 25-253, WT Docket No. 25-276, or any other federal regulatory proceeding shall occur in open session under proper public notice and Government Code § 54957.5 record-distribution.
C. Issue corrected § 54957.1 public reports as to each of the seven challenged actions, identi1,ing for each (i) the substance of the closed-session deliberation and any decision reached; (ii) the vote of eachCouncil member, including any abstention or recusal and the basis therefor; and (iii) the action’s relationship to any signed instrument, rati’ing authorization, or subsequent open-session item.
D. Identify the “two cases” (January 20), “three cases” (February 3), and “one case” (May 19) referenced on the respective agendas, providing for each (i) the name of any actual or potential adverse party; (ii) the forum in which the alleged litigation would proceed; (iii) the case or docket number, if any;and (iv) the date the City has filed, or anticipates filing, the initiating instrument — or, if no initiating instrument is or will be filed, confirm publicly that the Council has decided not to initiate.
E. Disclose the identity of all persons who attended or participated in each of the seven closed sessions, including Council members, City staff, attorneys, and consultants present in person, by telephone, or by videoconference; and identify the legal counsel who advised the Council in each closed session by name.
California State Bar number, firm, engagement agreement, and the Best Best & Krieger LL.P internal
matter number under which the attorney’s time was billed. For the May 19, 2026 closed session specifically, confirm in writing whether Gail Karish (Best Best & Krieger LLP, advising the City on the
AVX right-of-way matter during Bennett Givens’s parental leave), Bennett Givens (Best Best & Kricger
LLP), Scott H. Campbell (Best Best
& Krieger LLP), or any other Best Best
& Knieger LLP attorney was
present.
F. Produce a full accounting of Best Best
& Krieger LLP billings to the City under internal matter numbers 65059.00000 (general retainer), 65059.00012 (Public Records Act response work — the matter
ghost-drafting the City Clerk’s PRA responses to me), 65059.00300 (the May 22, 2026 FCC cx parte matter). and 65059.00306 (the LBUSD matter from which Best Best & Krieger LLP and Scott H.
Campbell were federally disqualified on March 22, 2022), including for each invoice the date, the timekeeping attorney, the substantive scope of work, and the matter to which the work was billed.
C. Acknowledge the federal disqualification of Best Best & Krieger LLP and Scott H. Campbell
from the LBUSD Federal Action by the March 22, 2022 federal court order, and confirm in writing the basis on which any Best Best
& Krieger LLP attorney advised the Council on any LBUSD-related closedsession matter from March 22, 2022 through case termination on June 20, 2024 including in particular the March 27, 2024, May 21, 2024, and subsequent LBUSD-related closed sessions described above.
H. Adopt a prospective written policy or resolution committing the Council going forward to: (i) refrain from invoking Government Code § 54956.9(d)(4) absent a documented “adjudicatory proceeding” predicate within § 54956.9(c); (ii) identi’, on every future agenda item invoking any subdivision of § 54956.9(d), the specific statutory predicate, the matter to which the predicate applies, and (to the extent permitted by § 54956.9(g) and (h)) the name and forum of the litigation; (iii) report under § 54957. 1 every direction to staff regarding compensation of any City employee given at any closed session; (iv) refrainfrom backdating any compensation increase or contract amendment to a date prior to the open-session vote authorizing it; (v) refrain from invoking § 54956.9(d)(l) “existing litigation” for closed sessions on matters where the substantive Council decision has already been finalized and reduced to a signed instrument; (vi) issue every § 54957.1 public report at the public meeting at which the closed session was held not at a later re-staged closed session weeks or months afterward.
I. Confirm individually, under signature, the participation and factual basis of each Council member who participated in any of the three 2026 § 54956.9(d)(4) closed sessions (Mayor Marshall,Mayor Pro Tern Lavelle, Council Member Ponce, Council Member Dc La Rosa, and Council Member Schickling). Each individual Council member confirmation shall identify (i) whether the member attended the closed session by name and date; (ii) the existing facts and circumstances on which the member relied in invoking the § 54956.9(d)(4) exemption; (iii) whether the member knew at the time of’ the closed-session vote that the documents identified in the City’s May 11, 2026 Public Records Act #2 production (my September 22, 2025 constituent email and my December 18, 2025 FCC Reply Comments) constituted protected First Amendment petitioning activity; and (iv) the member’s reconciliation of the closed-session vote with the member’s prior unanimous open-session votes on Resolutions 22-47, 24-16. and 24-17 supporting the AVX Project. This individualized confirmation is requested because the cure- and-correct decision must be the Council’s collectively, but the underlying Brown Act compliance is each member’s individually under Government Code § 54959.
VII. Reservation of Rights
Nothing in this demand letter shall be construed as a waiver of any claim. I expressly reserve, on behalf of myself and AVX Networks, all rights to pursue the following, in any forum, against any person:
• Government Code § 54959 misdemeanor Section 54959 provides that “each member of a legislative body who attends a meeting of that legislative body where action is taken in violation of any provision of this chapter, and where the member intends to deprive the public of information to which the member knows or has reason to know the public is entitled under this chapter, is guilty of a misdemeanor.” I reserve all rights to refer any unrescinded or uncolTecteci action to the District Attorney for the County of Los Angeles and to the Attorney General for the State of California.
• Government Code § 1090, 1092, 1097, and 91005.5 — individual personal liability for any Council member, City Manager, or other official who participated in any contract or financial decision while having an undisclosed financial interest, including but not limited to any campaign contribution received from Best Best & Krieger LLP, from any client of Best Best & Krieger LLP, or from any other entity having a direct or contingent professional interest in the matters set forthabove. • First Amendment retaliation under 42 U.S.C. § 1983, against the City and against individual Council members in their individual capacities. Lozrnan v. City ofRiviera Beach,585 U.S. 87 (2018); Nieves v. Bartlett, 587 U.S. 391 (2019). The temporal proximity between my December 18, 2025 FCC Reply Comments (filed in WC 25-253) and the January 20, 2026 closed session (held thirty-three days later, with my FCC filing identified on the City’s own May II. 2026 production as one of the two triggers of that closed session) supports the presumption of retaliatory motive recognized by the Ninth Circuit.
• Tortious interference with prospective economic advantage and with contractual relations, against any person whose conduct interferes with (i) the December 18, 2025 federal grant award to AVX Networks under CPUC Resolution T-17896 in the amount of 37,57l,833; (ii) AVX Networks’s contractual and regulatory relationships in connection with that grant; or (iii) AVX iTetvorkss prospective economic advantage in the Catalina Island broadband market and the federal Build America rulemaking proceedings.
a California Code of Civil Procedure § 526a taxpayer-waste action, against the City and against individual Council members, for City funds expended in connection with the closed-sessionactions identified above, including without limitation Best Best & Kricger LLP billings under matter numbers identified in Section VI.F.
a California Public Records Act litigation under Government Code § 7923,000 et seq., for the City’s continuing failure to produce records responsive to my Public Records Act requests bearing on the closed-session actions identified above. a California Civil Code § 52.1 (Bane Act) civil-rights action, against any official whose threats. intimidation, or coercion interfered with the exercise of my constitutionally protected rights. • Naming of presently-unknown DOE defendants by amendment under California Code of Civil Procedure § 474, upon discovery of facts establishing individual or entity liability.
VIII. Consequences of Failure to CureIf the Council fails to cure or correct any of the seven challenged actions within thirty (30) days ofreceipt of this demand, I intend to commence an action under Government Code § 54960(a) seeking a judicial declaration that the closed sessions ofJanuary 20, 2026; February 3, 2026; May 19, 2026; March 27, 2024; May 16, 2023; September 17, 2024; and May 21, 2024 were convened or reported in violation of the Brown Act and were therefore unlawful. As to the May 19, 2026 closed session specifically, I intend to seek nullification under § 549601, the 90-day window for which expires on August 17, 2026. I will further seek injunctive relief, attorney’s fees and costs under Government Code § 54960.5, and such further relief as the court deems just and proper — including such relief as the court determines isnecessary to address the broader pattern set forth in Section V above.
I am available to confer with the City Attorney or other authorized representative of the Council to clarifythe scope of cures requested and to facilitate prompt resolution. I may be reached at [email protected] or (949) 394-7099.
Respectfully submitted,
LNCE WARE
P0 Box 172
Avalon, California 90704
[email protected]
(949) 394-7099
Scott Campbell
From: Lance Ware <[email protected]>
Sent: Wednesday, June 3, 2026 5:08 PMTo: Gabrielle Morones, City Clerk; David Maistros, City Manager; Scott CampbellCc: Matthew Baker, Finance Director; Anita Taft-RiceSubject: Demand to Preserve Evidence — June 2, 2026 City Council Meeting & Broadcast This message could be suspicious
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VIA EMAIL AND CERTIFIED MAIL — RETURN RECEIPT REQUESTED City of Avalon — Office of the City Clerk (Custodian of Records)City Manager David Maistros City Attorney, Best Best & Krieger LLP
410 Avalon Canyon Road, Avalon, CA 90704
Dear City Clerk, City Manager, and City Attorney:
This letter places the City of Avalon (the “City”) on formal written notice of its duty to preserve evidence relevant to reasonably anticipated litigation, including proceedings under the Ralph M. Brown Act (Gay. Code § 54960, 54960.1, 54960.2) and related claims arising from the conduct, recording, and public broadcast of the June 2, 2026 City Council meeting,
This notice is made in the public interest, in furtherance of the public’s right of access to open meetings; it concerns the City’s conduct and records and is not a matter of any individual’s personal interest.On June 2, 2026, members of the public present in the Council Chambers observed Council members seated at the daisand members of the public addressing the Council, while the City’s online broadcast displayed a notice that the meeting was “cancelled due to AV issue,” carried no audible audio, and then terminated. Stated without characterization of intent, these are the objective circumstances. They bear directly on the public’s right of access under the Ralph M.Brown Act (Gov. Code § 54953) and on the integrity of the City’s official record of the meeting, and are the subject ofreasonably anticipated litigation.
You must immediately suspend all routine or automatic destruction, deletion, overwriting, recycling, re-imaging, trimming, re-encoding, and log-rotation that could affect any of the materials below, and preserve each item in its native/original form with all original metadata intact. This duty extends to materials held by any officer, employee,agent, contractor, or vendor of the City, and to materials on personal devices or personal accounts used for City business (City of San José v. Superior Court (2017) 2 Cal.5th 608).
1. Recordings and media. Every audio and video recording of the June 2,2026 meeting in any form or location, including: the original/native file uploaded to the City’s video/YouTube channel (not a re-export); any liveThis document was created by an application that isn’t licensed to use novaPDF.
Purchase a license to generate PDF files without this notice. stream session data; any in-house, local, or backup recording; any separate audio recording; and the certified “official record” of the meeting. Do not delete, trim, edit, replace, or change the privacy/visibility status of the published video.
2. The Chambers audiovisual & streaming system. The configuration, routing, audio-source selection, and mute state of the Council Chambers audio system, microphones, mixer/DSP, and streaming encoder as they existed on June 2, 2026; all system, event, error, and diagnostic logs from the encoder, mixer/DSP, and streaming/webcasting software or appliance forJune 2, 2026; all maintenance, service, repair, and support records for that system from January 1, 2024 to present; and the physical equipment itself (encoder, mixer/DSP, recorders, operator workstation) preserved in current state — no reset, reimage, reconfiguration, orreplacement.
3. AV vendor and operator records. All contracts, statements of work, purchase orders, and invoices with any audiovisual, streaming, or IT vendor or contractor (including without limitation Key Code Media, Inc.); all service tickets, work orders, dispatch records, and remote-access logs concerning the Chambers AV/streaming system; and all records reflecting whether any such vendor was on site, was contacted, responded, or was not contacted, in connection with June 2, 2025.
4. Video-channel administration. All records of administration of the Citys video/YouTube channel, including the roster of administrators/managers; upload, edit, and trim history; any additions, deletions, enabling, disabling, or modifications of captions, subtitles, or transcripts for any video; and live-stream start/stop event records.
5. Operators and access. Records identifying every person with operator access to the Chambers AV/streaming system and administrative access to the video channel; the person(s) who operated the broadcast on June 2,2026; and physical-access records — keys/badges to the AV control area, equipment racks, and Chambers, and keycard/badge access logs and visitor logs for City Hall, the Chambers, and AV areas for June 1—3, 2026.
6. Surveillance and other camera recordings. All security/surveillance camera recordings of the Council Chambers, any AV control room or booth, City [lall entrances, lobby, hallways, and parking areas, and any additional cameras in the Chambers (beyond the broadcast camera), for June 1—3, 2026; and all door/alarm/intrusion logs for the same period.
7. Meeting-occurrence records. All versions of the June 2, 2026 agenda and any amendments; the meeting notice and any notice of cancellation, with posting records (date, time, location, and person posting); draft and final minutes; the official-record certification; sign-in sheets; affendance/presence records; and all public-corn ment request cards or slips submitted that day.
8. Communications. All communications — email, text/SMS, chat (Teams/Slack/etc.), voicemail, and contemporaneous notes — to, from, or among Council members, the City Manager (Maistros), City Clerk (Morones), Assistant City Manager (Francis), Finance Director (Baker), AV/lT staff (including Public Works/AV Specialist Jamie Hmielak), any AV/streaming vendor, and the City Attorney (BB&K), concerning: the June 2 meeting; the asserted “AV issue”; the decision to designate the meeting “cancelled”; the decision to begin, mute, or stop the broadcast; and the handling, retention, editing, or release of any recording — for the period May 1,2026 to present — including any such communications on personal devices or personal accounts.
9. Microsoft 365 tenant data. The City’s email and collaboration run on Microsoft 365 (Exchange Online and Microsoft Teams). The City, as tenant administrator, must place and maintain a Microsoft 365 eDiscovery/InPlace Litigation Hold on the mailboxes and accounts of the custodians named in paragraph 7, and preserve — without alteration — the Unified Audit Log, mailbox audit logs, message-trace records, Teams chat and channel messages, and OneDrive/SharePoint content for the period stated, and suspend any retention policy that would purge them.
10. Internet/data-service and connectivity records. All records identifying the City’s internet-service provider(s) and data-circuit provider(s) serving City Hall and the Council Chambers, the related service agreements and invoices, and any provider-side or City-side network/connectivity logs or outage records for June 1—3, 2026 bearing on the broadcast.
The duty to preserve is independent of, and broader than, any later records request. Failure to preserve may give rise to evidentiary sanctions and an adverse-inference instruction (CACI No, 204), and may implicate Government Code § 34090, 34090.6 and Penal Code § 6200. Please confirm in writing within ten (10) days that these holds are in place and that automatic deletion/overwrite affecting the above has been suspended. 2 This document was created by an application that isn’t licensed to use novaPDF.
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Nothing herein waives any right or remedy, all of which are expressly reserved.
Respectfully,
Lance Ware
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